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INSPIRED BY NATURE

Nature has those splendors a


curious soul desires. There are
spectacles that enchant and
phenomena that captivate. The
making of textile is an inspired
event that manifests the richness
of the vibrant nature.

VISION
Setting trends globally in the textile industry.
Responsibly delivering products and
services to our partners.

MISSION

To deliver value to our partners through innovative


technology and teamwork. Fulfilling our social and
environmental responsibilities.

VALUES
Integrity
Passion
Creativity
Teamwork

Contents
Company information
Color
Texture
Details
Shape
Pattern
Organogram
Strategic Objectives
Product
Stakeholders Engagement
Profile of the Directors
Board Committees
Code of Conduct and Ethics
Shareholders' Information
Chairmans Message
Directors' Report
Sustainability Report
Financial Highlights
Financial Ratios
Graphical Analysis
Our Value Addition and its Distribution
Horizontal Analysis of Financial Statements
Vertical Analysis of Financial Statements
Comments on Financial Analysis
Statement of Compliance with the Code of Corporate Governance
Notice of annual general meeting
Review report to the members on statement of compliance with best practices of the code of corporate governance
Auditors' report to the members
Balance sheet
Profit and loss account
Statement of comprehensive income
Cash flow statement
Statement of changes in equity
Notes to the Financial Statements
Attendance at board and committee meetings
Pattern of shareholding

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Consolidated financial statements


Group Directors' report
Auditors' report on Consolidated Financial Statements
Consolidated Balance sheet
Consolidated Profit and loss account
Consolidated Statement of comprehensive income
Consolidated Cash flow statement
Consolidated Statement of changes in equity
Notes to the accounts

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Form of proxy
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Annual Report/2014

Company Information
BOARD OF DIRECTORS

MOHOMED BASHIR
ZAIN BASHIR
MOHAMMED ZAKI BASHIR
ZIAD BASHIR
S.M. NADIM SHAFIQULLAH
DR. AMJAD WAHEED
ADNAN AFRIDI

CHIEF FINANCIAL OFFICER

MOHAMMED SALEEM SATTAR

COMPANY SECRETARY

MOHAMMED SALIM GHAFFAR

AUDIT COMMITTEE

S.M. NADIM SHAFIQULLAH


MOHAMMED BASHIR
ADNAN AFRIDI
MOHAMMED SALIM GHAFFAR

- Chairman & Member


- Member
- Member
- Secretary

HUMAN RESOURCE AND


REMUNERATION COMMITTEE

MOHAMMED BASHIR
ZAIN BASHIR
S.M. NADIM SHAFIQULLAH
MOHAMMED SALIM GHAFFAR

- Chairman & Member


- Member
- Member
- Secretary

BANKERS

ALLIED BANK LIMITED


BANK AL HABIB LIMITED
ASKARI BANK LIMITED
AL BARAKA BANK (PAKISTAN) LIMITED
BARCLAYS BANK PLC PAKISTAN
BANK ALFALAH LIMITED
BANKISLAMI PAKISTAN LIMITED
BURJ BANK LIMITED
THE BANK OF PUNJAB
DUBAI ISLAMIC BANK PAKISTAN LIMITED
FAYSAL BANK LIMITED
HABIB BANK LIMITED
HABIB METROPOLITAN BANK LIMITED
HSBC BANK MIDDLE EAST LIMITED
MCB BANK LIMITED
MEEZAN BANK LIMITED
NATIONAL BANK OF PAKISTAN
NIB BANK LIMITED
SAMBA BANK LIMITED
SILKBANK LIMITED
SONERI BANK LIMITED
STANDARD CHARTERED BANK (PAKISTAN) LIMITED
UNITED BANK LIMITED

AUDITORS

KRESTON HYDER BHIMJI & CO.


Chartered Accountants

INTERNAL AUDITORS

ANJUM ASIM SHAHID RAHMAN


Chartered Accountants

LEGAL ADVISORS

A.K. BROHI & CO


ADVOCATES

REGISTERED OFFICE

PLOT NO.82, MAIN NATIONAL HIGHWAY


LANDHI, KARACHI-75120

SHARE REGISTRAR

FAMCO ASSOCIATES (PRIVATE) LIMITED


8-F, NEXT TO HOTEL FARAN, NURSERY, BLOCK 6,
P.E.C.H.S., SHAHRAH-E-FAISAL, KARACHI.
PHONE NO. (+92-021) 34380101-5
FAX NO. (+92-021) 34380106

MILLS

LANDHI INDUSTRIAL AREA, KARACHI-75120

E-MAIL

finance@gulahmed.com

URL

www.gulahmed.com

Annual Report/2014

- Chairman
- Vice Chairman/Executive Director
- Chief Executive Officer
- Non Executive
- Independent
- Independent
- Independent

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Organogram

BOARD OF DIRECTORS

REMUNERATION
& HR COMMITTEE

AUDIT
COMMITTEE

CHIEF EXECUTIVE OFFICER

INTERNAL
AUDIT
(OUTSOURCED)

PROCESSING

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SPINNING

SERVICES

Annual Report/2014

Strategic Objectives
The Company is primarily focused on following areas:

Achieving sustainable growth in revenue of the Company.

To be the industry leader by adopting latest technologies, production methodologies and artistic passion to produce best products
setting new fashion trends.

Develop and retain a highly capable human resource team to achieve our mission.

To be a responsible corporate citizen and produce goods minimizing effects on environment while upholding the standards of
health and safety at workplace. To share our resources with our community to help safeguarding their environment.

Maintaining long-term relationships with customers and suppliers.

Diversification of product portfolio to yield high margins.

Annual Report/2014

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Environmental Overview (PESTEL Analysis)


Political Factors

Political situation is yet to be fully mature

Security concerns
Economic Factors

Change in discount rates impacts financial cost

Rise in energy cost

Currency fluctuations

Existence of facilities to exporters like Export Refinance Facility and Long-Term Financing Facilities

Investors are pulling out their capital by relocating, business shrinkages or shutdown due to energy crisis
Social Factors

The customers are very much fashion oriented and the companies are keen to develop and introduce new products setting new
fashion trends

The customers are very particular towards their safety while using the products and therefore our products require proper
compliance with regards to consumer protection measures

Growth in population is out-spacing the annual growth, resulting in unfavorable impact on the economy
Technological Factors

Technology change defines how fast technology advances. The Company is continuously monitoring technological advancement
in production and is willing to adopt changes. It has state-of-the-art production facilities.

Low research and development efforts in the industry and absence of industry specific think tanks

Increasing trends of online shopping


Environmental Factors

Environmental factors especially recent heavy rains and flooding has affected overall economy.
Legal Factors

Increasing indirect taxes

Trade and textile policies are not fully implemented. Policies by new government are awaited

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Annual Report/2014

SWOT Analysis
Strengths

Image and branding

Pioneers in apparel fabric for both ladies and gents

In-depth relationship with export customers

Competent, vastly experienced and loyal staff and workers

Global presence wholly owned set-ups in UAE, Europe and USA to market the products

Edge in technology state-of-the-art plant and machinery

In-house power generation

Composite mill from cotton to made-ups

Cordial relationship with the workforce

Strong raw material base as Pakistan is the fourth largest producer of cotton
Weaknesses

Export dependent on limited customers

Highly labor intensive industry

Labor productivity is very low

Leverage is somewhat higher than the desired level


Opportunities

Growing retail market including expansion of womens and mens apparel

Growth in exports as a result of GSP Plus status from European Union

Less explored USA, Canada and Australian markets

Expand web-based sales

E-marketing
Threats

Internal security situation and the looming war in the region

Deteriorating economic conditions in the country compounded by increasing debt burden and circular debt

Irrational taxation policies

Continuous increase in energy prices and gas shortage affecting production and its cost

Worsening of the economic conditions in Europe and America

Textile industry is comprised of a large and unorganized sector, and the large number of competitors mostly in this sector especially
in the ladies fashion fabric fray

Key employees lured by competitors

Shortage of raw material (cotton) due to natural disasters like heavy rain, floods, etc.

Worldwide surplus production capacity resulting in price-cutting war between the competitors

Annual Report/2014

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Product
PRODUCT STEWARDSHIP
At Gul Ahmed, we focus on delivering high-quality products to our customers. Customers satisfaction is our key objective.
We have taken following measures regarding product quality and consumer protection:

Quality control checks at different stages of the process of production and final quality check at the time of packing;
Damaged or broken products are replaced;
Environmental friendly and quality packing;
Free product exchange service;
Customer friendly and hygienic environment;
Product safety guidelines for washable products to enhance their life;

PRODUCT PORTFOLIO
The production of textile is a mix of technical expertise and the creative art required to make products acceptable to valued
customers. At Gul Ahmed, efforts are made to strive and grow through learning, continuous improvement and innovation. Gul
Ahmed is also equipped with the most advanced technology that enables it to cater to a vast spectrum of product varieties.
Yarn
Yarn produced by Gul Ahmed is exported to a host of countries
around the globe. Gul Ahmed exports its yarn to different regions
including China, other Asian, Middle East countries and Europe.
Gul Ahmed manufactures different qualities of yarn which include
carded, combed, compact siro, fancy, plied, core spun, slub,
package dyed/cone dyed, gassed mercerized/dyed yarn.
Fabric
Gul Ahmed has the facility to dye and print the whole range of
home textile and apparel fabrics. In addition, we also have setup
for back coating and flock printing that gives us an added
opportunity to serve the needs of our customers. Our products
under the fabric category are plain fabric, sheeting fabric, poplin,
canvas, oxford, duck, bedford cord, herringbone, ottoman, twill,
sateen, rib stops, slub fabric, stretch fabric and mlange fabric.
Made-ups
Gul Ahmed's fine textile products represent a unique fusion of the
centuries-old traditions of the east and the latest textile
technology of the west. The made-ups can be in white, dyed,
printed or yarn-dyed form and in different styles of confectioning.
Our made-ups section comprises:

Curtains
Upholstery fabrics
Apparel and Garments
We have always kept alive the passion of creative
designers and invited young talent to express their talent
in various forms of design. This is how the Company
encourages them and also benefits from their ideas. Our
value creation process and our human resource have
never let us down. The passion of our customers to rush
to the stores on every new launch is a testament to our
success in creating appealing designs and new fashion
trends.
Getting impressive response from the local market, we
have now gone for the export of garments. Designing
products according to the fashion flow of the target
countries and the GSP Plus status have helped us
increase our exports.

Home Textiles
Home textile products furnish all home and office
decoration needs and are designed to set new trends and
fashion vibe. This section includes:
Sheets and Pillowcases
Comforters
Quilt/Duvet covers
Bed-in-a-Bag
Decorative pillows

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Annual Report/2014

Stakeholders Engagement
Good stakeholder relationships are viewed as being fundamental to the core business of the Company.
Stakeholder engagement is at the heart of the Companys sustainable development agenda. The Company
believes that without engaging stakeholders, there can be no common enduring agreement, ownership or
support for our business. The Company can only succeed, especially in the long-term, if it takes into
consideration the environment in which it operates and endeavors to meet the needs of the stakeholders
affected by it.
Employees
The Company realizes the fact that employees need to 'know'
that they are valued. Therefore, the Company maintains a
friendly environment for its employees and regards their
feedback as essential for success and growth at each
performance level. This creates motivation amongst employees
and provides new and innovative ideas to the Company.
The Company maintains effective communication between the
management and the staff. To secure maximum cooperation of
the employees and to motivate them to give their best, it is
ensured that they feel fairly treated, and understand the overall
mission, objectives and values of the Company.
As a good employer, the Company emphasizes staff welfare and
recreational facilities in order to maintain staff morale and
enhance their motivation. The Company contributes to Workers
Profit Participation Fund, Workers Welfare Fund, retirement plans
(Provident Fund and Gratuity Fund), Health Insurance,
Employees Old Age Benefits Institution and Social Security
Institution.
Employees relationship is designed to secure staff commitment
to resolve any disputes and address grievances. The Company
has provided platform to the employees to raise their concerns,
complaints and grievances.
Customers
It was well said by an American author Michael LeBoeuf; A
satisfied customer is the best business strategy of all. We also
maintain a good relationship with our customers by providing
quality products and making deliveries on time. We also provide
specialized services to our customers as per their requirements.
To further strengthen our relationship, the Company organizes
and attends various events and exhibitions, providing our
customers opportunities to interact, and obtains their feedback to
understand their needs and requirements.

The Company develops two-way, mutually beneficial


relationships with strategic suppliers and partners. This enables
each business to develop shared goals, visions and strategies.
Trade buyers and sellers can effectively collaborate to deliver the
best value to end customers, which is beneficial to each partner.
The Company complies with all the legal requirements and
operates ethically and accordingly deals with suppliers and
partners having similar standards.
Shareholders
Safeguarding the interest and adding value for our shareholders
are among our key objectives. Shareholders meetings and timely
and accurate reporting to our shareholders are the effective
modes of engagements with our shareholders. In addition to this,
we promptly attend to shareholders inquiries and appreciate their
feedback.
Government Authorities
We regularly coordinate with government authorities on different
trade and commerce related issues. The Company carries out its
business in compliance with all laws and regulations enacted in
the country. As a responsible corporate citizen, the Company
pays all duties and taxes in time.
General Public and Local Community
The Company is continuously contributing towards the
betterment of the local community. The Company has taken
numerous initiatives for the local community which include
employment opportunities, development of water recycling plant
to preserve the nature, establishment of Police and Rangers
check posts, etc.
Media
The Company disseminates information through print, electronic,
social and other web media.

Suppliers and partners


The quality of the products which goes into what we manufacture
has a direct impact on the quality of the products that go to the
market bearing our brand.
Annual Report/2014

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Profile of the Directors


Mr. Mohomed Bashir

Mr. Zain Bashir

Mr. Mohomed Bashir joined the Board of Gul Ahmed Textile Mills
Limited in 1982. He is a fellow member of Chartered Institute of
Management Accountants (CIMA), United Kingdom.

Mr. Zain Bashir joined the Board in May 1997. He is also the
Vice Chairman of the Company and is a certified director from
the Pakistan Institute of Corporate Governance (PICG). He is on
the Board of Landhi Infrastructure Development and
Management Company which is responsible for enhancing the
infrastructure of Landhi Industrial Area. In 2009-2010, he
remained the Chairman of the Landhi Association of Trade &
Industry. In 2012-2013, he remained the Chairman of the
Pakistan Bedwear Exporters Association.

Chairman

Mr. Mohomed Bashir has a very rich and extensive experience in


the textile industry. He is currently the Chairman of the Board of
Directors of Gul Ahmed Textile Mills Limited and Pakistan
Business Council. He is also serving on the Boards of the
following companies;

Pakistan Business Council (Chairman)


Gul Ahmed Energy Limited
Habib Metropolitan Bank Limited
GTM (Europe) Limited UK
Gul Ahmed International Limited (FZC) UAE
GTM USA Corp USA
Habib University Foundation
Education Fund for Sindh
Gul Ahmed Holdings (Private) Limited

Presently, his honorary Government, Trade & Industry and


Consular positions include:

Vice Chairman/Executive Director

His extensive association with the textile sector has provided him
with an in-depth knowledge of the industry.

Mr. Mohammed Zaki Bashir


Chief Executive Officer

Mr. Mohammed Zaki Bashir joined the Board in March 2008. He


is currently the Chief Executive Officer of Gul Ahmed Textile Mills
Limited. He holds a graduate degree from Regents Business
School, London, in the subject of International Business and is
also a certified director from the Pakistan Institute of Corporate
Governance (PICG).

Honorary Consul General of Sweden Karachi


Member, Advisory Board of CPLC, Government of Sindh
(2010)
Member, Pakistan France Business Council
Member, Pakistan German Business Council

Through his thorough knowledge of the Company, he has


contributed to the overall growth of the Company.

Previously, he has also held the following honorary Government


and Trade & Industry positions:

Mr. Ziad Bashir has been on the Board since February 1999. A
graduate from Babson College, USA, with a bachelor degree in
Entrepreneurial Studies, he has a comprehensive experience of
the textile sector and is involved in various developmental and
operational activities of the Company.

Vice Chairman, Pakistan Business Council 2013 - 2014


President, International Textile Manufacturers Federation
(ITMF) (2010-2012)
Vice President, International Textile Manufacturers Federation
(2008-2010)
Founder, Trustee, Fellowship Fund For Pakistan till
February 2014
Member, Advisory Committee, Federal Tax Ombudsman,
Government of Pakistan (2011-2014)
Member, Economic Advisory Council, Government of
Pakistan (2001-2003/2008-2013)
Member, Export Promotion Bureau, Government of Pakistan
(2002-2007, 1995-1997)
Member, National Strategy on Textiles (2006-2007)
Chairman, Pakistan Britain Advisory Council (2002-2005)
Chairman, All Pakistan Textile Mills Association (1989 -1990)
Vice Chairman, All Pakistan Textile Mills Association
(1982-1985)
Chairman, Pakistan Swiss Trade and Industry Committee
(1981-2000)
Governing Board, Pakistan Design Institute (1981- 2000)
In recognition of his services, he was awarded SitaraeImtiaz by
the President of Pakistan in 2006 and has also been conferred as
Justice of Peace.

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Mr. Ziad Bashir

Non-Executive Director

He is also associated with the Information Technology (IT)


industry and has played a key role in the transformation of the
Company's IT infrastructure. He is a certified director from the
Pakistan Institute of Corporate Governance (PICG).
Over the years, he has served as Chairman of the Landhi
Association of Trade and Industry and on the Board of Central
Managing Committee of All Pakistan Textile Mills Association
(APTMA). He is also currently on the Board of Governors of
Young Presidents Organization (YPO), Pakistan.

Mr. S.M. Nadim Shafiqullah

Independent Non-Executive Director


As an independent non-executive director, Mr. S.M. Nadim
Shafiqullah's association with the Board dates back to March
2008. He is also the Chairman of the Audit Committee of the
Company and a certified director from Pakistan Institute of
Corporate Governance (PICG).
He is also serving on the Board of Security Leasing Corporation
Limited since March 1995, and as the Vice-Chairman of the
Board since November 2005.

Annual Report/2014

Dr. Amjad Waheed

Independent Non-Executive Director


Dr. Amjad Waheed joined the Board as an independent
non-executive director on March 31, 2011. He holds a Doctorate
in Business Administration with a major in Investments and
Finance from Southern Illinois University, USA and is also a
Chartered Financial Analyst. For the last nine years, he is CEO of
NBP Fullerton Asset Management Limited (NAFA), which is a
subsidiary of National Bank of Pakistan, with Fullerton Fund
Management Company of Singapore as the other joint venture
partner. NAFA is presently managing 15 mutual funds, two
pension funds and several Advisory portfolios with around
Rs. 44.5 billion as of August, 2014 invested in these funds.

Before joining NAFA, Dr. Amjad was Head of Equity Mutual


Funds & Portfolios at Riyadh Bank, Saudi Arabia, for about five
years where he was managing around US$ 7.5 billion invested in
22 mutual funds. Prior to that he was Head of Asset Management
at NIT, and Chief Operating Officer of FC-ABN AMRO Equities for
several years. Before moving back to Pakistan, Dr. Amjad
Waheed was Assistant Professor of Finance at Tennessee State
University, USA and has published several articles in top journals
of the world such as, Journal of Banking & Finance and Financial
Management.

Dr. Amjad Waheed has served on the boards of various


companies including Siemens (Pakistan) Engineering Co. Ltd.,
Nishat Mills Ltd., PICIC, Askari Bank Ltd., Millat Tractors Ltd.,
Fauji Fertilizer Company Ltd., Pakistan Tobacco Company Ltd.,
Parke-Davis & Company Ltd., Treet Corporation Ltd., Atlas
Investment Bank Ltd., Bata Pakistan Ltd.
Dr. Amjad Waheed has been elected as the Chairman of the
Board of Directors of Mutual Funds Association of Pakistan
(MUFAP) for the year 2013-2014.

Mr. Adnan Afridi

Independent Non-Executive Director


Mr. Adnan Afridi joined the Board as an independent
non-executive director in March 2011. Mr. Adnan Afridi is
currently CEO of Tethyan Group. Tethyan is a 50:50 joint venture
between Antofagasta Minerals of Chile and Barrick Gold
Corporation of Canada (both gold and copper mining leaders
globally), which developed the Reko Diq project in Balochistan.
The Company is currently engaged in ongoing international
arbitrations against the Government of Balochistan at the ICC in
Paris and the Government of Pakistan at the ICSID in
Washington. The Company has already invested over US$ 220
million into the project since 2006 apart from the acquisition cost.
Prior to this assignment, Mr. Adnan Afridi was Senior Advisor to
Silkbank Limited, a publicly listed retail bank with 85 branches
and a sponsor group that includes IFC, Nomura, Bank of Muscat
and Sinthos Associates (led by Mr. Shaukat Tarin, former Federal
Minister for Finance, Pakistan). Mr. Adnan Afridi was responsible
for capital raising and the M&A strategy for the bank, and is also
responsible for all non-banking financial services for the bank
(Private Equity, Insurance, Distressed Assets and REITs).
Mr. Adnan Afridi also managed a Venture Capital and Private
Equity portfolio that includes investments in Retail Food,
Annual Report/2014

Corporate Agriculture, Financial Services and Oil & Gas. Adnan


was also a key member of the Private Equity team that led the
successful Dun and Bradstreet brand and business buyout in all
of South Asia, GCC and Africa (77 countries).
Mr. Adnan Afridi has a degree in Economics (A.B., Magna Cum
Laude, 1992) from Harvard University and a degree in Corporate
Law (JD, Magna Cum Laude in 1995) from Harvard Law School.
19 years of international experience in Change Management,
business
transformation,
innovation
and
profitability
enhancement in blue chip companies, public sector and start-up
situations. His industry experience includes Capital Markets,
Commodities, Private Equity, Financial Services, FMCG, Food
and Health Care sectors, operating in CEO roles with Board level
representations.

Mr. Adnan Afridi started his career with Monitor Company, USA
as a Strategy Consultant, designing business unit and corporate
strategies for Fortune 50 companies. Over the past 15 years, he
has been facilitating foreign direct investment into Pakistan by
assisting Private Equity transactions, including key privatization
transactions (e.g., K-Electric Limited, formerly Karachi Electric
Supply Company). Prior to joining KSE, he served as the Chief
Executive Officer of the Overseas Investors Chamber of
Commerce and Industry (OICCI), a company representing major
foreign investors operating in Pakistan. OICCI membership
contributes over 14% of the GNP of Pakistan and over one third
of all revenues collected by the Government of Pakistan. Adnan
was responsible for developing the KFC and Dunkin Donuts
brands in Pakistan. His current food investments and
management interests include Pizzo (a local casual Italian
brand), KBQ (a Dubai based Asian casual dining restaurant) and
Chairman Mao (Karachis largest delivery based provider of
Oriental cuisine).
As Managing Director of Karachi Stock Exchange, he led a
change management program responsible for restructuring the
organization into a commercial entity with the introduction of
professional management, new products including, bond trading,
derivatives and data-vending, enhanced branding and
agreements with regional exchanges. During his tenure, the KSE
witnessed significant reforms in Listing Regulations (e.g.
introduction of book-building), derivatives trading and Risk
Management systems. Mr. Adnan Afridi has been the key
interlocutor between global portfolio investors and the Pakistan
equity markets.

Mr. Adnan Afridi currently serves as an Independent Director on


the Board of Gul Ahmed Textile Limited as well as Trading
Corporation of Pakistan. Mr. Adnan Afridi is also on the Board of
Silkbank Limited. Previously, Mr. Adnan Afridi has served on the
Board of Governors (Education Chair 2010) of Young Presidents
Organization (YPO) Pakistan. He also served as the Chairman of
South Asian Federation of Exchanges (SAFE) between
2009-2010. Mr. Adnan Afridi is also a Trainer for IFC-Pakistan
Institute of Corporate Governance Course on Governance for
Board of Directors of Banks.
Mr. Adnan Afridi is an active supporter of charitable organizations.
He has served as the President of the Old Grammarians Society
& Trust and is currently member of the Board of Governors (and
Honorary Treasurer) of The Kidney Centre.
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Board Committees
AUDIT COMMITTEE
1.

Composition

2.

Mr. S.M. Nadim Shafiqullah


Mr. Mohomed Bashir
Mr. Adnan Afridi
Mr. Mohammed Salim Ghaffar

Chairman & Member


Member
Member
Secretary

Terms of Reference
The committee shall be responsible for:
Reviewing the system of internal controls, risk management and the audit process besides assisting the Board in reviewing
financial statements.
Recommending to the Board of Directors the appointment of external auditors, determining audit fees and settling other
related matters.
Determination of appropriate measures to safeguard the Companys assets.
Review of quarterly, half-yearly and annual financial statements of the Company, prior to their approval by the Board of
Directors.
Major judgmental areas:
Significant adjustments resulting from the audit;
The going concern assumption;
Any changes in accounting policies and practices;
Compliance with applicable accounting standards; and
Compliance with listing regulations and other statutory and regulatory requirements.
Review of preliminary announcements of results prior to publication.
Facilitating the external audit and discussion with external auditors of major observations arising from interim and final audits
and any matter that the auditors may wish to highlight (in the absence of management, where necessary).
Review of the management letter issued by external auditors and managements response thereto.
Ensuring coordination between the internal and external auditors of the Company.
Review of the scope and extent of internal audit and ensuring that the internal audit function has adequate resources and is
appropriately placed within the Company.
Consideration of major findings of internal investigations and managements response thereto.
Ascertaining that the internal control system including financial and operational controls, accounting system and reporting
structure are adequate and effective.
Review of the Companys statements on internal control system prior to endorsement by the Board of Directors.
Instituting special projects, value for money studies or other investigations on any matter specified by the Board of Directors, in
consultation with the Chief Executive and considering remittance of any matter to the external auditors or to any other external
body.
Determination of compliance with relevant statutory requirements.
Monitoring compliance with the best practices of corporate governance and identification of significant violations thereof; and
Consideration of any other issue of matter as may be assigned by the Board of Directors.

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Annual Report/2014

HUMAN RESOURCE AND REMUNERATION COMMITTEE


3.

Composition

4.

Mr. Mohomed Bashir


Mr. Zain Bashir
Mr. S.M. Nadim Shafiqullah
Mr. Mohammed Salim Ghaffar

Chairman & Member


Member
Member
Secretary

Terms of Reference
The committee shall be responsible for:
Ensuring that the appropriate procedures exist to assess the remuneration levels of the Chairman, Chief Executive Officer
(CEO), Non-Executive Directors, Executive Directors, Board Committees and the Board of Directors as a whole.
Ensuring that the Company adopts, monitors and applies appropriate remuneration policies and procedures.
Ensuring that reporting disclosures related to remuneration meet the Boards disclosures objectives and all relevant legal
requirements.
Making recommendations to the Board on appropriate remuneration, in relation to both the amount and its compositions, for the
Chairman, CEO, Non-Executive Directors, Executive Directors and Senior Executives.
Developing and recommending to the Board performance based remuneration incentive programs such as bonus schemes,
long-term incentive plans.
Developing, maintaining and monitoring appropriate Human Resource Policies and Procedures.
Developing, maintaining and monitoring appropriate talent management programs including succession planning, recruitment,
development, retention and termination policies and procedures for senior management.
Developing remuneration related disclosure objectives for the Company and ensuring that publicly disclosed information meets
those objectives, all legal requirements and is accurate; and
Developing and monitoring Workplace Health and Safety metrics and initiatives to ensure a safe working environment.

Annual Report/2014

22

Code of Conduct and Ethics


Integrity and good corporate conduct guide us towards our business partners, colleagues, shareholders and
the general public. The code of conduct and ethics, as stated below, are the foundation of our business
principles:
Abide by the law
Employees shall not make, recommend or cause to be taken any action known or believed to be in violation of any law,
regulation or corporate policy.
Employees shall not make, recommend or cause to be made any expenditure of funds known or believed to be in violation of
any law, regulation or corporate policy.
Integrity, Honesty and Respect for Others
Employees shall conduct their employment activities with the highest principles of honesty, integrity, truthfulness and honor. To
this end, employees are to avoid not only impropriety, but also the appearance of impropriety.
Employees shall not use their position to force, induce, coerce, harass, intimidate or in any manner influence any person,
including subordinates, to provide any favor, gift or benefit, whether financial or otherwise, to themselves or others.
Employees representing the Company to the third parties shall not allow themselves to be placed in a position in which an actual
or apparent conflict of interest exists.
Confidentiality
Employees shall not use or disclose the Company's trade secrets, proprietary confidential information, or any other confidential
information gained in the performance of Company's duties as a means of making private profit, gain or benefit.

23

Annual Report/2014

Shareholders Information
Annual General Meeting
The annual shareholders meeting will be held on October 30,
2014 at 9:30 a.m. at Moosa D. Dessai ICAP Auditorium, Institute
of Chartered Accountants of Pakistan, G-31/8, Chartered
Accountants Avenue, Clifton, Karachi. Shareholders as of
October 23, 2014 are encouraged to participate and vote.
Any shareholder may appoint a proxy to vote on his or her behalf.
Proxies should be filed with the Company at least 48 hours before
the meeting time. CDC shareholders or their proxies are
requested to bring with them copies of their Computerized
National Identity Card along with the Participants ID Number and

their account number at the time of attending the Annual General


Meeting in order to facilitate their identification.
Shareholders who have not yet submitted photocopy of their
CNIC are requested to send the same to the Share Registrar of
the Company FAMCO Associates (Private) Limited, 8-F, Next to
Hotel Faran, Nursery, Block-6, P.E.C.H.S., Shahra-e-Faisal,
Karachi at the earliest.
Ownership
On June 30, 2014 the Company has 2,973 shareholders.

Karachi Stock Exchange Share Prices 2013-14


Period
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter

High
30.67
45.32
65.66
72.35

Price in Rupees

Low
23.10
20.50
45.50
48.51

Announcement of Financial Results


The tentative dates of the announcement of financial results and payment of cash dividend (if any) for the year 2014-15 are as follows:
Period
1st Quarter
2nd Quarter
3rd Quarter
Annual Accounts

Financial Results
October 28, 2014
February 27, 2015
April 28, 2015
September 29, 2015

Dividend Payment (if any)


------November 30, 2015

The Company reserves the right to change any of the above dates.
Share Registrar
Enquiries concerning lost share certificates, dividend payments, change of address, verification of transfer deeds and share transfers
should be directed to our Share Registrar FAMCO Associates (Private) Limited, 8-F, Next to Hotel Faran, Nursery, Block-6, P.E.C.H.S.,
Shahra-e-Faisal, Karachi, Phone Nos. (+92-021) 34380101-5 and Fax No. (+92-021) 34380106.
Web Reference
Annual/Quarterly reports are regularly posted at the Companys website: www.gulahmed.com
Investor Relation Contact
Mr. Mohammed Salim Ghaffar, Company Secretary
Email: salim.ghaffar@gulahmed.com UAN: (+92-021) 111-485-485 & 111-486-486 Fax: (+92-021) 35018838

Annual Report/2014

24

Chairmans Message
Dear Stakeholders
It is indeed a great pleasure to present the Companys Annual Report and audited financial statements for the year ended
June 30, 2014.
Global recession of 2008-09 badly affected most of the developed countries including USA and almost whole of Europe. Asia has led
the global recovery from the recession as the fastest growing economies in the world are noted to be China and India.
Talking about Pakistans economy, it continued to witness growth despite tough fiscal, energy, political and security challenges. Reforms
and initiatives are needed to be made on war footings to reinvigorate the economy.
Despite these tough economic challenges, your Company managed to increase sales by 9% and increase the profit after tax by 74%
as compared to the previous year. This is due to our commitment and focus on risk management, good governance, strong information
system, creating more brand value and operational quality.
Amidst the ever-changing fashion flows, the Company is the symbol of creating new fashion trends, a fact made possible by remaining
continuously updated with demographic and geographic requirements and changes. The Company has a clear and far-reaching vision
of enhancing its productivity and core competency by embracing technological advancement and therefore achieving accelerated
growth rate and competitiveness.
We continue to drive efficiency and cost reduction by leveraging the scale and geographic footprint of our business. Furthermore, we
are also taking advantage by exploiting the flexibility of our business strategy to respond to market trends. This has enabled us to offer
value to our customers.
We believe strong governance is critical to the long-term creation of shareholder value, is our belief. We have the system in place to
regularly review and refresh our corporate governance practices and the legal requirements. The new Board of Directors was
established during the year following elections in March 2014 and includes three independent Directors. The positions of the Chairman
and of the Chief Executive have been separated.
Furthermore, your Company is poised to reap benefits of its well established brand for future growth and better returns for the
stakeholders.
I would like to thank all our employees for their contribution throughout the year. We value our employees and their efforts in
implementing our strategy, living our values and representing the Company in our communities. We also appreciate the tremendous
trust the customers have shown. Finally, I would like to express my gratitude to the shareholders of the Company.
Mohommad Bashir
Chairman

25

Annual Report/2014

Directors Report
The directors of your Company are pleased to present the Annual Report and the audited financial statements

for the year ended June 30, 2014 together with Auditors Report thereon.
ECONOMIC AND INDUSTRIAL OVERVIEW
During the fiscal year (FY) 2013-14, some positive results were
noted; particularly stabilizing foreign exchange reserves, stability
in prices, encouraging industrial growth, historical heights of
Karachi Stock Exchange, shift in market-based (T-Bills and PIB)
public debt toward medium to long-term, successful launching of
Eurobond and auction of 3G/4G licenses reinforced this view.
GDP growth of 4.14% in FY 2013-14 (3.7% in FY 2012-13) is the
highest in the last six comparative years. Encouragingly, this
relatively higher growth was led by recovery in the industrial
sector, thanks to better performance of Large-Scale
Manufacturing (LSM). LSM grew by 5.31% as compared to
4.08% during the previous year. Major contributions (around
52%) were made by fertilizers, leather products, food, beverages
and tobacco and rubber products. Textile could only contribute
1.44% to the growth of LSM in FY 2013-14 (0.91% in FY
2012-13).
Another significant event is the appreciation of PKR vs. USD
parity during the year. By 11th July 2014, PKR has appreciated by
6.7% against the USD in the interbank market since January
2014. This appreciation is in contrast to the higher inflation in
Pakistan as compared to the inflation in the United States of
America and other western world trading partners. As a result, the
countrys export competitiveness has been adversely affected
and the Government is losing revenues on account of import
duties as imports have become cheaper. Moreover, there has
been a significant increase in outward remittances on account of
profits, dividends and other services impacting our balance of
payment position.
Pakistan has to sustain and improve on required structural
changes and the economic management, and carefully monitor
the PKR-USD exchange rates. Improvement in countrys security
and political conditions is also critical in attracting non-debt
creating foreign financial inflows.
Textile industry is the biggest manufacturing sector of Pakistan,
the largest employer of the workforce and has the longest
production chain, with inherent potential for value addition at each
stage from cotton to ginning, spinning, weaving, processing,
made-ups and garments. Overall the sector contributes around
8% of GDP. However, despite being the fourth largest producer
and 3rd largest consumer of cotton globally, Pakistans
comparative advantage is to increase value added exports as
reflected in countrys textile ranking of 15th in world textiles
exports.
Annual Report/2014

Major threats to the industry are the shortage of energy and law
and order situation. The problems of increase in cost of
production due to rise in energy costs and appreciation of the
PKR vs. USD have off-set the prospects of increase in textile
exports due to GSP Plus status in the ongoing FY which will
impact the exports of value added textile sector.
PERFORMANCE OVERVIEW
The current FY 2014 also remained challenging for the industry
as a whole. Despite these challenges, we are pleased to report
that overall performance has remained positive and the
Companys management continues to focus on creating value for
its stakeholders, society and shareholders. Key performance
indicators (KPIs) which we monitor are:
Description

Units

2014

2013

Export sales

Rs. in millions

21,485

16,979

Local sales

Rs. in millions

11,422

13,183

Gross prot

Rs. in millions

5,976

4,751

Prot before tax (PBT)

Rs. in millions

1,496

852

Prot after tax (PAT)

Rs. in millions

1,235

711

EBITDA

Rs. in millions

3,519

2,900

EPS

Rupees

6.75

4.09

Debt to equity

Time

0.34

0.40

Current ratio

Time

1.06

1.05

Rupees

36.43

35.63

Break-up value per share

Profit and loss analysis


The performance is improving as our sales have grown by 9%.
We were able to contain our finance cost which was achieved by
efficient utilization of credit facilities. The Company has earned
PBT of Rs. 1,496 million versus PBT of Rs. 852 million in the FY
2013. PAT for the year is Rs. 1,235 million as compared to PAT of
Rs. 711 million in the previous FY which represents 74% growth
over the comparative year.
Export sales have increased by 27%, whereas local sales have
decreased by 13% over the comparative previous FY. Within local
sales only yarn sales have decreased, whereas the sale of value
added processed fabric, garments and made-ups has increased.
Description

Units

2014

Fabric, Garments etc.

Rs. in millions

8,774

2013
6,961

Yarn

Rs. in millions

4,008

7,017

Striving to achieve economies of scale we were able to cut the


cost of production thereby improving the gross profit by 3.47%.

26

Directors Report
Financial position analysis
Shareholders equity has increased by 23%. Trade debts have
decreased by 47%. Property, plant and equipment have
increased by 15% mostly due to addition of latest machinery,
whereas long-term financing has increased only by Rs. 84.24
million which is 4% as compared to fiscal year 2013.

FUNDS MANAGEMENT
Your Company posted improved operational performance and
profitability which resulted in stronger cash flows. Management
closely monitors the working capital requirements and cash flow
forecasts along with interest and foreign exchange rates to
manage risks or avail opportunities that may arise.

Overall there is improvement in the leverage, debt to equity and


interest cover ratios. Debtors and creditors turnover has also
improved. Comparisons are given in the financial analysis
section.

The Company ensures that funds are available as and when


required. At the year end, the Company had Rs. 6,312 million
(2013: Rs. 3,560 million) unutilized credit lines to cover any
temporary mismatches.

Subsequent effects

INFORMATION TECHNOLOGY
Relevant, timely and accurate reporting of information is essential
to fulfill the needs of the users for decision-making. Considering
needs of the users and role of IT in success of the business, the
Company regularly reviews and upgrades the management
information system which is geared to:

1.

The Board of Directors of the Company in its meeting held


on September 27, 2014 has proposed the following:
a)
b)

c)

2.

Bonus Shares: Issue 25% bonus shares on the


existing paid up capital of the Company in the ratio of
one share for every four shares held.
Dividend: Pay cash dividend @ Rs. 1.50 per share i.e.
15% for the year ended June 30, 2014. Holding
Company and an Associated Company have agreed to
relinquish their portion of cash dividend.
Transfer from Unappropriated Profit: An amount of
Rs.650 million be transferred to general reserve from
unappropriated profit

Fire in Warehouse
On July 26, 2014 there was an unfortunate fire incident on
the third floor of one of our warehouses. Goods stored on
this floor were damaged. Adequate insurance cover to
mitigate the loss is in place. Estimate of the loss is around
Rs. 400 million. All the Companys production facilities are
working soundly. There is no disruption in any operation.

CAPITAL STRUCTURE
During the year, authorized share capital was increased from
Rs. 2,000 million to Rs. 4,000 million to cater to the bonus issue
of the shares and the Company issued 20% bonus shares. As a
result, the paid-up capital has increased to Rs. 1,828 million.
Overall shareholders equity increased by Rs. 1,231 million to
Rs. 6,660 million as a result of the profits retained in the business.
The debt to equity ratio as at the end of June 30, 2014 improved
to 25:75 (June 30, 2013: 28:72).
The Company is now a subsidiary of Gul Ahmed Holdings
(Private) Limited holding 123,314,552 (67.45%) shares.

27

monitor and improve ongoing performance;


provide up-to-date information on which to base strategic
decisions;
verify and demonstrate departmental effectiveness; and
create service-wide checks and balances to safeguard
asset and ensure accountability.

The Company, in line with current development in IT and


E-Commerce, started online sales system. This has enabled the
Company to do business 24-hours-a-day, 7-days-a-week. This
year, the Company has earned revenues of Rs. 141.27 million
through online sales.
To maintain IT system as reliable, safe and accurate, the IT
department has taken adequate measures including installation
of anti-virus and firewalls, backup procedures, standby
arrangements and disaster recovery plans.
QUARTERLY ANALYSIS
Summary of quarterly results for the year ended June 30, 2014:
First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

Total

Rupees in millions
Equity

5,584

5,999

6,432

6,660

6,660

Sales

7,051

8,562

8,331

9,069

33,013

GP

1,228

1,695

1,645

1,408

5,976

PAT

156

414

433

232

1,235

EPS

0.85

1.04

6.75

Rupees per share


2.26

2.37

Annual Report/2014

Net assets
Net assets of the Company have increased by 23% during the
year. The Company performed better despite the tough economic
conditions. The increase in net assets is due to the profits
retained.
Sales
Sales growth over the year was recorded at 9%. First half
contributed 47% to the annual sales, whereas the third and fourth
quarters contributed 53%. The Company has started to reap
benefits of EUs GSP Plus program.
Gross profit
Gross profit has increased progressively; there has been an
overall improvement of 2.4% in the gross margin as compared to
the corresponding period.
Profit after tax
Profit after tax has also increased steadily in each quarter.
Increase in gross profit and controlling of the expenditure side
contributed to the increase in profit after tax.
RISK MANAGEMENT

Strategic risks
1.

Technological shift rendering production process


obsolete:

Management ensures that the Company is producing


goods with the latest technology available. Any
technical advancement is acquired and adopted after
feasibility studies.

2.

Decline in exports:

The Board meets quarterly to review the results.

3.

Competition:

Exhibitions and fashion shows to market product.

Effective advertisement and marketing to boost


demand.

Continuous focus on the quality of the products to meet


quality standards at reduced cost.

Operational
1.

Turnover of skilled staff

The management ensures that adequate remuneration


and compensation packages are being offered to the
staff to retain and motivate them.

Continuous staff rotation and staff training contributes


to succession planning.

Formal work procedures and instructions, and


standardization of the processes are in place to help
new employees to work effectively.

2.

Health and Safety at workplace

Company has implemented appropriate Health and


Safety policies and procedures. Health and Safety
assurance team regularly visits and conducts audits to
ensure that all employees adhere to Health and Safety
procedures.

Social audit team regularly visits and also pays surprise


visits to ensure compliance.

Disciplinary actions are taken against any


non-compliance of policies and procedures.

3.

Wastage of resources

Management of the Company conducts quality control


reviews and critically monitors production and
wastages and takes appropriate actions to minimize
waste. Waste material is recycled as much as possible.

The Company has systematic and structured Risk Management


Process as an integral part of governance process which is
continually and periodically re-assessed.

Identication

Review and
evaluation
of the plan

Implementation

Assessment
Risk
Management
Process

Risk
Management
Plan

Our Risk Management Process covers measuring, monitoring


and controlling the strategic, financial, operational, market and
compliance risks. Following are the significant risks to which the
Company is exposed and the mitigating factors:

Annual Report/2014

28

Directors Report
Financial
1.

Liquidity risk

Management assesses liquidity risk where the


Company may encounter difficulty in meeting
obligations associated with financial liabilities.

Committed credit facilities are obtained from financial


institutions to bridge liquidity gap.

2.

Foreign currency risk

The Company is exposed to foreign currency risk and


manages this risk through various options such as
forward cover, bill discounting, etc.

3.

Interest rate risk

The Company has long term finance and short-term


borrowings at fixed and variable rates. The Company is
exposed to interest rate risk on long and short-term
financing facilities and these are covered by holding
Prepayment Option and Rollover Option.

4.

Credit risk

Wherever possible, sales are either in cash, against


advance or irrevocable letters of credit, providing
adequate cover against this risk.

Credit sales are made after due diligence of the


customers.

Credit risk insurance cover is obtained for export


customers whose credit rating based on due diligence
is not fully satisfactory.

Commercial
1.

Market risk

The Company is continuously developing new products


and improving quality of the existing products to
compete in the market.

Compliance
1.

Risk of non-compliance

The Board has established policies and procedures to


ensure that the Companys business is carried in
accordance with applicable laws and regulations. Audit
committee ensures that policies and procedures are
being followed.

CORPORATE SOCIAL RESPONSIBILITY


Corporate Social Responsibility is discussed in detail on page no. 31
forming part of the Annual Report 2014.

29

CODE OF CORPORATE GOVERNANCE


The management of the Company is committed to good
corporate governance and complying with the best practices. As
required under the Code of Corporate Governance, the Directors
are pleased to state as follows:

The financial statements prepared by the management


of the Company present fairly its state of affairs, the
result of its operations, cash flows and changes in
equity.

Proper books of accounts of the Company have been


maintained.

Appropriate accounting policies have been consistently


applied in preparation of financial statements and
accounting estimates are based on reasonable and
prudent judgment.

International Financial Reporting Standards, as


applicable in Pakistan, have been followed in
preparation of financial statements and any departure
therefrom has been adequately disclosed.

The system of internal control is sound in design and


has been effectively implemented and monitored. The
Audit Committee comprises three members, all
members are non-executive directors. The Chairman is
an independent non-executive director.

The directors of the Board are well aware of their duties


and responsibilities as outlined by corporate laws and
listing regulations. In compliance with the provisions of
the Listing Regulations, four directors have attended
and completed Corporate Governance Leadership
Skills program under the Board Development Series of
Pakistan Institute of Corporate Governance (PICG).

There are no significant doubts upon the Company's


ability to continue as a going concern.

There has been no material departure from the best


practices of corporate governance, as detailed in the
listing regulations.

The value of investment of provident fund based on its


unaudited accounts as on June 30, 2014 is Rs. 470
million (FY 2013: As per audited accounts Rs. 462
million)

Statements regarding the following are annexed or are


disclosed in the notes to the financial statements:

Number of Board meetings held and attendance


by directors.

Key financial data for the last six years.

Pattern of shareholding.

Trading in shares of Company by its Directors,


Chief Executive, Chief Financial Officer and
Company Secretary and their spouses and minor
children.

Annual Report/2014

BOARD CHANGES
During the year, election of the Directors was held at the
Extraordinary General Meeting on March 19, 2014. The new
Board of Directors consists of the following seven members:
S.No.
1.
2.
3.
4.
5.
6.
7.

NAME

Mr. Mohomed Bashir


Mr. Zain Bashir
Mr. Mohammed Zaki Bashir
Mr. Ziad Bashir
Mr. S.M. Nadim Shafiqullah
Dr. Amjad Waheed
Mr. Adnan Afridi

DESIGNATION
Chairman
Vice Chairman
Chief Executive
Director
Director
Director
Director

The term of the new Board will end on March 31, 2017.
The Board acknowledges the valuable contribution by Mr. Abdul
Aziz Yousuf and Mr. Abdul Razak Bramchari, outgoing members
of the Board.
The newly elected Board has an optimum combination of
executive, non-executive and independent non-executive
directors. Five out of the seven directors on the Board are
non-executive, three of whom are independent directors. None of
the directors on the Board is a director in more than seven listed
companies. All the directors have diverse exposures, necessary
skills and understanding to deal with various business issues
and have the ability to review and challenge management
performance.
AUDITORS
The present auditors, Kreston Hyder Bhimji & Co., Chartered
Accountants, retired and presented themselves for
reappointment.
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements for the year ended June 30,
2014 of the Company and its subsidiaries Gul Ahmed
International Limited (FZC) UAE, GTM (Europe) Limited UK and
GTM USA Corporation USA are attached.
FUTURE OUTLOOK
Low tax to GDP ratio, energy deficit, high unemployment, security
concerns, weak confidence and low competitiveness are key
problems creating hindrances in the growth of the country.
Current political situation is also a matter of concern which may
also have an unfavorable impact on the economic program
agreed with IMF. Advanced economies are expected to lead
global economic recovery in the next few years, which will
definitely present an opportunity for Pakistan. By overcoming

Annual Report/2014

energy needs, the country can become competitive in


international market (particularly textile industry) and Pakistan
could post a rather decent growth.
The consumer is under pressure due to continued energy crisis,
adversely affecting the purchasing power. Any further increase in
energy price and/or imposing a levy will no doubt lead to higher
inflation.
Monetary policy so far has had a positive impact on the economy
with a steady discount rate. However the management of the
PKR/USD parity is a matter of concern. Revaluation of PKR
against USD is making the countrys exports uncompetitive.
Natural disasters, mostly floods due to weather changes and
outdated irrigation system of Pakistan, have played havoc on the
prosperity of the country. Due to recent floods, loss of hundreds of
precious lives has been reported along with losses of billions of
Rupees due to the destruction of crops, infrastructure, houses
and deaths of cattle. The cotton crop has also been affected; a
situation which has raised concerns about the increase in prices.
Our Company has shown its ability to grow in challenging times.
We are working to increase the sales and profit, and materialize
the opportunity of GSP plus scheme. Our human resource pool
and efficient quality management system will lead the Company
to progress further. Our efforts to diversify our product portfolio
are bearing fruit and are being further strengthened.
ACKNOWLEDGMENT
Directors acknowledge and appreciate the efforts of the
employees and valuable support of the various government
bodies, financial institutions, our customers, shareholders and
members of the board of directors.
For and on behalf of the Board

Karachi
September 27, 2014

Mohammed Zaki Bashir


Chief Executive Officer

30

Sustainability Report
Gul Ahmed is a member of BCI and strongly promotes its
objectives by purchasing the cotton which is produced
according to BCI guidelines. Gul Ahmed purchased BCI
cotton weighing 5,855 tons in 2011-2012, 7,564 tons in
2012-2013 and 11,051 tons in 2013-14.

The world has reached a point where the Earth will have to end
the burden placed on her, if the people do not lift the burden
themselves. Therefore, we operate responsibly and act in the
interests of our environment.
Stakeholders need to be informed of the measures and
initiatives taken to ensure sustainability. This report is divided
under three performance measures Economic, Social and
Environmental.

4.

Energy
Currently, the country is facing a severe energy crisis and
efforts to install new capacity of power generation are yet to
materialize. This adverse condition has resulted in
load-shedding and power shutdowns. Considering the
importance of energy and to cater to energy needs, the
Company has heavily invested in power generation. This
development includes the installation of a gas turbine and
new fuel-efficient generators with the addition of
energy-efficient machines to our various manufacturing
units.

5.

Contribution to national exchequer


With the payment of taxes, the Company is making
contribution to the countrys development and growth. The
Company contributed a total of Rs. 988.02 million in FY
2014 (FY 2013: 694.81 million) in various federal, provincial
and local taxes.

ECONOMIC MEASURES
1.

Community development
In the area of community development, the Company helps
people to recognize and develop their ability and potential
to respond to problems and needs which they share. It
provides opportunity to local people to learn and develop
their own skills by providing them job opportunities.
Our children are the future of our country. The Company
recognizes its responsibility towards children and strongly
discourages child labor.
We encourage young talent by sponsoring and organizing
different fashion designing programs and shows to
appreciate their creativity and also offer them internship
opportunities.

2.

Educational promotion/awareness
Gul Ahmed has always emphasized the education and
professional awareness of the employees. The Company
encourages its employees to pursue higher studies and
supports them in achieving their educational goals.
We also arrange training programs and ensure the
participation of employees to enhance their professional
knowledge. Employees of Gul Ahmed are sponsored to
participate in seminars and workshops to improve their
personal skills.

3.

31

Better Cotton initiative (BCI)


BCI is a program aiming to improve the environment along
with the livelihood of the farmers. This is achieved by
following the guidelines of BCI. BCIs objectives are to:

Reduce the environmental impact of cotton production

Improve livelihood and economic development in


cotton producing areas

Reinforce commitment of keeping the flow of better


cotton throughout the supply chain

Endure the credibility and sustainability of BCI

SOCIAL MEASURES
1.

Health, Safety and Environment


The management of Health, Safety and Environment
(HSE) standards is imperative for any organization. Our
focus is on health and safety of our workforce, security for
assets, uninterrupted and successful business operations
and protection of our local community and environment.
HSE Policy
The Company has established policies and practices on
HSE. The main objective of these policies is that we
conduct our business in compliance with laws and
regulations related to health, safety and the environment in
a way to make sure that workplace is safe and healthy, and
our environment in which we operate is preserved.
The areas inside the factories are clearly marked with
safety guidelines and use of safety tools and accessories
which are provided to the workforce to protect them from
injuries to their health and accidents. Chemicals storage
area clearly contains Material Specification Data Sheets of
Chemicals (MSDS).
The Company has established policies and practices on
HSE. Salient features of HSE policy are:

Annual Report/2014

2.

Maintain security of the people and assets


Produce goods without compromising adverse effects
on environment
Comply with all laws and regulations on HSE
Train employees and then hold them accountable for
HSE responsibilities
Conduct audit and ensure that activities are conducted
in accordance with HSE guidelines of the Company
Maintain green and clean environment
Monitor accident reports and causes to make
procedures and environment more controlled to avoid
accidents in future
Human resource
The Company recognizes strategic importance of
human capital and focuses on building and developing
the human resource. For this purpose, the Board has
established Human Resource Committee dedicated to
review HR related decision-making.
Our approach for managing people effectively
establishes a more open, flexible and caring
management style so that staff remains motivated and
is developed in a way that they will give their best to
support the Companys objectives. The Company
also offers competitive remuneration packages to its
employees along with bonuses to employees to
appreciate and acknowledge their performance.
Properly structured programs are also in place for the
evaluation and appraisals of the employees so that
they may be trained and rewarded accordingly. At Gul
Ahmed, training is imparted not only to the
management or technical staff but also to the workers.
This will increase their efficiency and provide them
more skills to compete while pursuing next level jobs.
The Company has always encouraged the hiring of
women and special persons to help them in a manner
which is respectable. We have always pursued a
policy that restricts discrimination on the basis of
gender, religion, nationality and even an abnormality.
At the year end, we have more than 1200 women and
40 special persons on our payroll.
The Company has retirement plans in the form of
gratuity and provident fund. The Company has
contributed Rs. 102 million (2013: Rs. 82 million)
during the year towards retirement benefits. The total

Annual Report/2014

retirement funds are valued at Rs. 642 million (2013:


Rs. 534 million). During the year, Rs. 75 million (2013:
Rs. 42 million) have been paid to outgoing employees.
ENVIROMENTAL MEASURES
The Company is committed to making a significant contribution
to environmental improvements. At the same time, the Company
is working to reduce the impact of its activities on the
environment. This commitment is reflected in the following
activities:
1.

Effluent Treatment Plant


The Company has installed Effluent Treatment Plant (ETP)
which is functioning since July 2006 and meets all the
NEQS standards. The capacity of plant is 1 million gallon
per day.

2.

Caustic recovery plant


The Company has installed Caustic Recovery Plant (CRP)
at its processing facility to recover caustic soda from the
wastewater generated from the mercerization process.
CRP is helpful in recovering caustic soda to conserve
resources and to reduce wastewater pollution.

3.

Combined cycle gas turbine


We have been able to reduce our carbon footprint through
combined cycle gas turbine. This helps in utilizing the
energy of hot flue gases into waste heat recovery boiler, to
produce high-pressure steam generation. The steam
turbine running with it can generate 2.25 MW. Due to this
cycle, we have reduced 30,000 tons/NM carbon dioxide.

4.

Installation of latest generators


The Company has replaced some generators totalling 8
MW capacity with the new version of energy-efficient
generators. These generators consume around 22-25%
less natural gas to generate the same amount of electrical
energy.

5.

Condensate recovery of steam at goller pad


The Company has upgraded steam recovery process at
Goller Pad Steam. This has resulted in saving 2.67 tons of
steam per day.

6.

Go green
The Company took a major initiative to make the
employees aware of the benefits of planting trees, and
conserving energy and water. We planted 247 saplings at
our factories and residential areas to promote the green
culture. Employees have been made aware of energy

32

Sustainability Report
conservation and encouraged to switch off lights,
air conditioners and other electrical equipment when
leaving the office not only at the end of the working hours
but also during lunch, prayers or any other reason so that
energy can be saved.
AWARDS AND RECOGNITIONS
Our commitment to corporate responsibility enables us to
produce and deliver quality products in the most sustainable
way. Our product quality, creativity and innovation make our
Company one of the best companies. Gul Ahmed has been
awarded and recognized in the areas of environment and
product quality. The Company has received a number of awards
and recognitions including the recent Best Corporate Report
Award, Legend of Textile Award, Pakistan France Business
Alliance Trade Performance Award, etc. We have also been
certified for our various efforts relating to safe working

33

environment and products, some of which are given below:

SA-8000 and IWAY/ISQS both for keeping a safe and


healthy environment

Oeko-Tex Standard 100 for international testing for


textiles limiting use of chemicals which are harmful for
consumers

ISO 9001:2008 for best quality management system

International Maritime Organization certificate of


compliance OE 100 V1.3

Annual Report/2014

Financial Highlights
Profit and Loss

2014

2013

2012

2011

2010

Rs. in million
Rs. in million
Rs. in million
Rs. in million
Rs. in million
Rs. in million
Rs. in million

33,013
5,976
2,659
1,496
1,235
*81
457

30,243
4,751
2,120
852
711
305

24,945
3,512
1,400
(1)
(240)
-

25,464
4,655
2,664
1,537
1,196
635

19,689
3,173
1,653
708
478
79
-

13,906
2,359
1,209
170
80
-

Property, plant and equipment

Rs. in million

8,210

7,132

6,829

6,654

6,140

6,106

Intangible
Long-term investment, loans,
advances and deposits

Rs. in million

20

23

27

39

16

29

Rs. in million

151

112

109

96

93

90

Net current assets

Rs. in million

890

666

(98)

422

(224)

(390)

Total assets employed

Rs. in million

9,271

7,933

6,867

7,211

6,025

5,835

Share capital
Reserves
Shareholders' equity

Rs. in million
Rs. in million
Rs. in million

1,828
4,832
6,660

1,523
3,905
5,428

1,270
3,203
4,473

635
4,078
4,713

635
2,961
3,596

635
2,483
3,118

Long-term loans
Deferred liabilities

Rs. in million
Rs. in million

2,239
372

2,155
350

2,096
298

2,199
299

2,223
207

2,567
149

Total capital employed

Rs. in million

9,271

7,933

6,867

7,211

6,025

5,835

Operating activities
Investing activities
Financing activities

Rs. in million
Rs. in million
Rs. in million

2,090
(1,833)
217

(161)
(1,068)
210

3,497
(920)
(70)

(2,617)
(1,250)
(148)

454
(711)
(170)

442
(931)
398

Cash and cash equivalents at


the end of the year

Rs. in million

(7,715)

(8,188)

(7,169)

(9,676)

(5,660)

(5,233)

Sales
Gross profit
Operating profit
Profit/(loss) before tax
Profit/(loss) after tax
Cash dividend
Bonus share

2009

Balance Sheet

Represented by:

Cash Flow Statement

*Represents actual dividend amount excluding amount payable to Holding Company and an Associasted Company who have foregone their right to the dividend.

Annual Report/2014

34

Financial Ratios
2014
Profitability ratios

Gross profit ratio


Operating leverage ratio
EBITDA margin to sales
Net profit to sales
Return on equity
Return on capital employed

2009

18.28
2.03
13.19
4.70
28.80
40.25

16.12
0.88
11.92
2.43
14.22
27.87

16.96
1.57
13.37
0.58
2.73
21.82

1.06
0.20
0.01
0.06

1.05
0.27
0.01
(0.01)

0.99
0.24
0.01
0.14

1.03
0.19
0.01
(0.10)

0.97
0.34
0.01
0.02

0.95
0.39
0.01
0.03

1.62
0.10
0.34
2.29

2.03
0.11
0.40
1.67

2.25
0.11
0.47
0.98

2.67
0.10
0.47
2.34

2.40
0.11
0.62
1.75

2.69
0.12
0.82
1.16

145
2.52
22
16.76
126
2.91
4.02
1.36
41

121
3.00
28
13.01
100
3.64
4.24
1.43
49

151
2.41
30
12.15
86
4.23
3.65
1.41
95

134
2.72
31
11.60
82
4.43
3.83
1.25
83

98
3.74
45
8.05
73
4.98
3.21
1.35
70

107
3.40
66
5.54
76
4.77
2.27
1.02
97

Rupees
%
%
Times
Rupees

6.75
9.48
0.48
*0.02
*1.50
25
*22.21
*4.50
36.43

4.09
5.81
0.17
20
35.63

(1.73)
(12.18)
0.15
35.23

9.42
5.49
0.16
100
37.12

3.76
4.93
0.08
0.07
1.25
16.60
6.02
28.32

0.73
53.21
0.18
24.56

Rupees
Rupees
Rupees
Rs. in million

64.01
72.35
20.50
3,519

23.74
27.64
19.16
2,900

21.11
64.29
16.05
2,129

51.73
53.65
18.53
3,359

18.53
38.84
17.40
2,347

38.84
49.00
28.60
1,860

Financial leverage ratio


Weighted average cost of debt
Debt to equity ratio
Interest cover ratio

Earnings per share


Price earning ratio
Price to book ratio
Dividend yield ratio
Cash dividend per share
Bonus shares issued
Dividend payout ratio
Dividend cover ratio
Break-up value per share
Market value per share
at the end of the year
high during the year
low during the year
EBITDA

2010

14.08
23.48
8.53
(0.96)
(5.23)
19.90

Capital structure ratios

Investor information

2011

15.71
2.56
9.59
2.35
14.36
28.65

Current ratio
Quick/acid test ratio
Cash to current liabilities
Cash flow from operations to sales

Inventory turnover
Inventory turnover ratio
Debtor turnover
Debtor turnover ratio
Creditor turnover
Creditor turnover ratio
Fixed assets turnover ratio
Total assets turnover ratio
Operating cycle

2012

18.10
2.77
10.66
3.74
20.43
30.91

%
Times
%
%
%
%

Liquidity ratios

Turnover ratios

2013

Days
Days
Days

Days

Rupees

*Represents cash dividend proposed @ Rs. 1.50 per share. However Holding Company and an Associated Company have foregone their right to the dividend.

35

Annual Report/2014

Graphical Analysis
Investor ratios

Profitability ratios
Percentage

20

50

15

Gross profit
ratios

10

Net profit to
sales

2010

2011

2012

2013

30

Price earning
ratio

20

(10)

2014

-(5)

2009

2010

2011

2012

2013

2014

(20)

Turnover ratios

Liquidity ratios
Days

160

Inventory
turnover
Debtors
turnover

140
120

Creditors
turnover
Operating
cycle

100
80
60

Rupees

1.20
1.00
0.80

Current ratio

0.60

Quick / acid
test ratio

0.40

40

0.20

20
2009

2010

2011

2012

2013

0.00

2014

Cash flow years at a glance

2009

2010

2011

2012

2013

2014

Debt to equity ratio

Rs. in million

4,000

Rupees

0.90
0.80

3,000
2,000

Operating
activities

1,000

(1,000)

Earnings per
share

40

10

2009

Rupees

60

Investing
activities

2009

2010

(2,000)
(3,000)

Annual Report/2014

2011

2012

2013

2014

Financing
activities

0.70
0.60

Debt to
equity ratio

0.50
0.40
0.30
0.20
0.10
0.00

2009

2010

2011

2012

2013

2014

36

Graphical Analysis
Assets 2014

Assets 2013
33.90%

65.48%

33.77%

65.70%

0.24%
0.38%

Property, plant & equipment and intangible assets


Long-term investment
Long-term loans, advances and deposits
Current assets

Fixed assets growth

9,000

0.28%
0.25%

Property, plant & equipment and intangible assets


Long-term investment
Long-term loans, advances and deposits
Current assets

Rs. in million

1,400

8,000

1,200

7,000

1,000

6,000

800

5,000

600

4,000

400

3,000

200

Profit after tax

2,000
(200)

1,000
2009

2010

2011

2012

2013

Equity Growth

7,000

2014

Rs. in million

6,000

(400)

25,000

2009

2010

2011

2012

2013

Local and export sales

2014
Rs. in million

20,000

5,000

15,000

4,000

10,000

3,000
2,000

5,000

1,000
2009

2009
35,000

2010

2011

2012

2013

Share growth

Rs. in million

25

20,000

20

15,000

37

40

2012

2013

28.32

2014

Local

Break-up value per share

30

25,000

2011
Export

35

30,000

37.12

35.23

2011

2012

in Rupees
36.43
35.63

24.56

15

10,000

10

5,000

2010

2014

2009

2010

2011

2012

2013

2014

2009

2010

2013

2014

Annual Report/2014

Our Value Addition and its Distribution


Rs. '000s

2014

2013

Rs. '000s

33,429,940

99.30

30,243,000

99.87

235,555

0.70

38,558

0.13

33,665,495

100.00

30,281,558

100.00

22,881,932

67.97

22,451,882

74.14

Distribution and administration expenses


(Excluding employees' remuneration and taxes)

2,432,408

7.23

1,841,623

6.08

Employees' remuneration

4,732,903

14.06

3,474,262

11.47

Government taxes (includes income tax,


WPPF, WWF, duties, federal &
provincial taxes, Sales Tax etc.)

1,237,970

3.68

553,375

1.83

Providers of capital (Finance cost)

1,140,864

3.39

1,247,214

4.12

Contribution to society - Donations

4,619

0.01

2,139

0.01

Profit retained/(Accumulated Loss)

1,234,798

3.67

711,063

2.35

33,665,495

100.00

30,281,558

100.00

Value addition
Net sales including Sales tax
Other operating income

Value distribution
Cost of sales (excluding employees'
remuneration, duties and taxes)

Distribution of wealth 2014

Annual Report/2014

Distribution of wealth 2013

67.97%

Cost of sales

74.14%

Cost of sales

7.23%

Distribution and administration expenses

6.08%

Distribution and administration expenses

14.06%

Employees remuneration

11.47%

Employees remuneration

3.68%

Government taxes

1.83%

Government taxes

3.39%

Providers of capital (finance cost)

4.12%

Providers of capital (finance cost)

0.01%

Contribution to society

0.01%

Contribution to society

3.67%

Profit retained

2.35%

Profit retained

38

Horizontal Analysis of Financial Statements


2014

2013

2012

2011

2010

2009

2014

2013

2012

Rs. in '000s

2011

2010

2009

12.90

Variance %

Balance Sheet
Total equity

6,659,903

5,428,502

4,472,509

4,712,873

3,595,765

3,118,232

22.68

21.37

(5.10)

31.07

15.31

Total non-current liabilities

2,611,672

2,504,664

2,394,295

2,497,260

2,429,247

2,715,884

4.27

4.61

(4.12)

2.80

(10.55)

9.31

Total current liabilities

15,005,632

13,255,764

10,851,954

13,194,546

8,574,679

7,749,618

13.20

22.15

(17.75)

53.88

10.65

9.38

Total equity and liabilities

24,277,207

21,188,930

17,718,758

20,404,679

14,599,691

13,583,734

14.57

19.58

(13.16)

39.76

7.48

10.15

8,381,303

7,267,065

6,964,606

6,788,103

6,249,091

6,224,462

15.33

4.34

2.60

8.63

0.40

4.91

Total current assets

15,895,904

13,921,865

10,754,152

13,616,576

8,350,600

7,359,272

14.18

29.46

(21.02)

63.06

13.47

15.02

Total assets

24,277,207

21,188,930

17,718,758

20,404,679

14,599,691

13,583,734

14.57

19.58

(13.16)

39.76

7.48

10.15

24,944,859

25,463,845

19,688,794

13,906,465

9.16

21.24

(2.04)

29.33

41.58

18.60

(16,515,934) (11,547,856)

6.06

18.94

3.00

25.99

43.02

16.05
32.90

Total non-current assets

Profit and Loss Account


33,012,724

30,242,719

(27,036,675)

(25,491,927)

5,976,049

4,750,792

3,512,113

4,655,002

3,172,860

2,358,609

25.79

35.27

(24.55)

46.71

34.52

Distribution expenses

(2,122,660)

(1,509,886)

(1,322,582)

(1,090,588)

(791,442)

(585,657)

40.58

14.16

21.27

37.80

35.14 109.94

Administrative expenses

(1,313,920)

(1,086,920)

(955,070)

(808,926)

(700,085)

(572,983)

20.88

13.81

18.07

15.55

22.18

1.71

(116,197)

(72,356)

(653)

(116,918)

(53,619)

(13,712)

60.59

10,980.55

(99.44)

118.05

291.04

(8.89)

Net sales
Cost of sales
Gross profit

Other expenses

(21,432,746) (20,808,843)

235,555

38,558

166,617

25,245

25,116

22,594

510.91

(76.86)

560.00

0.51

11.16

23.80

2,658,827

2,120,188

1,400,426

2,663,815

1,652,830

1,208,851

25.41

51.40

(47.43)

61.17

36.73

29.20

Financial expenses

(1,162,850)

(1,268,651)

(1,401,842)

(1,126,361)

(944,603)

(1,038,990)

(8.34)

(9.50)

24.46

19.24

(9.08)

Profit before taxation

1,495,977

851,537

(1,417)

1,537,454

708,227

169,861

75.68

(60,204.70) (100.09)

117.08

316.95

(261,179)

(140,474)

(238,947)

(340,997)

(230,694)

(89,651)

85.93

(29.93)

47.81

157.32

(9.44)

1,234,798

711,063

(240,364)

1,196,457

477,533

80,210

73.66

(395.83) (120.09)

150.55

495.35

(22.00)

Other income
Operating profit

Income tax expense


Profit for the year

Equity and Liabilities

Current and Non-Current Assets

Rs. in million

2014

2014

2013

2013

2012

2012

2011

2011

2010

2010

2009

2009
0

5,000

10,000

15,000

Total current liabilities


Total non-current liabilities
Total equity

39

20,000

(41.21)

25,000

5,000

10,000

15,000

41.58
(15.84)

Rs. in million

20,000

25,000

Total non-current assets


Total current assets

Annual Report/2014

Vertical Analysis of Financial Statements


2014

2013

Rs. in '000s

Rs. in '000s

2012
%

Rs. in '000s

2011
%

Rs. in '000s

2010
%

2009

Rs. in '000s

Rs. in '000s

22.96

Balance Sheet
Total equity

6,659,903

27.43

5,428,502

25.62

4,472,509

25.24

4,712,873

23.10

3,595,765

24.63

3,118,232

Total non-current liabilities

2,611,672

10.76

2,504,664

11.82

2,394,295

13.51

2,497,260

12.24

2,429,247

16.64

2,715,884

19.99

Total current liabilities

15,005,632

61.81

13,255,764

62.56

10,851,954

61.25

13,194,546

64.66

8,574,679

58.73

7,749,618

57.05

Total equity and liabilities

24,277,207

100.00

21,188,930

100.00

17,718,758

100.00

20,404,679

100.00

14,599,691

100.00

13,583,734

100.00

8,381,303

34.52

7,267,065

34.30

6,964,606

39.31

6,788,103

33.27

6,249,091

42.80

6,224,462

45.82

Total current assets

15,895,904

65.48

13,921,865

65.70

10,754,152

60.69

13,616,576

66.73

8,350,600

57.20

7,359,272

54.18

Total assets

24,277,207

100.00

21,188,930

100.00

17,718,758

100.00

20,404,679

100.00

14,599,691

100.00

13,583,734

100.00

Total non-current assets

Profit and Loss Account


33,012,724

100.00

30,242,719

100.00

24,944,859

100.00

25,463,845

100.00

19,688,794

100.00

13,906,465

100.00

(27,036,675)

(81.90)

(25,491,927)

(84.29)

(21,432,746)

(85.92)

(20,808,843)

(81.72)

(16,515,934)

(83.88)

(11,547,856)

(83.04)

5,976,049

18.10

4,750,792

15.71

3,512,113

14.08

4,655,002

18.28

3,172,860

16.12

2,358,609

16.96

Distribution expenses

(2,122,660)

(6.43)

(1,509,886)

(4.99)

(1,322,582)

(5.30)

(1,090,588)

(4.28)

(791,442)

(4.02)

(585,657)

(4.21)

Administrative expenses

(1,313,920)

3.98

(1,086,920)

(3.59)

(955,070)

(3.83)

(808,926)

(3.18)

(700,085)

(3.56)

(572,983)

(4.12)

235,555

0.71

38,558

0.13

166,617

0.67

25,245

0.10

25,116

0.13

22,594

0.16

(116,197)

(0.35)

(72,356)

(0.24)

(653)

(0.00)

(116,918)

(0.46)

(53,619)

(0.27)

(13,712)

(0.10)

Net sales
Cost of sales
Gross profit

Other income
Other expenses
Operating profit
Financial expenses

2,658,827

8.05

2,120,188

7.01

1,400,426

5.61

2,663,815

10.46

1,652,830

8.39

1,208,851

8.69

(1,162,850)

(3.52)

(1,268,651)

(4.19)

(1,401,842)

(5.62)

(1,126,361)

(4.42)

(944,603)

(4.80)

(1,038,990)

(7.47)

Profit before taxation

1,495,977

4.53

851,537

2.82

(1,417)

(0.01)

1,537,454

6.04

708,227

3.60

169,861

1.22

Income tax expense

(261,179)

(0.79)

(140,474)

(0.46)

(238,947)

(0.96)

(340,997)

(1.34)

(230,694)

(1.17)

(89,651)

(0.64)

1,234,798

3.74

711,063

2.35

(240,364)

(0.96)

1,196,457

4.70

477,533

2.43

80,210

0.58

Profit for the year

Sales and Other Income

Sales and Other Expenses

Rs. in million

2014

2014

2013

2013

2012

2012

2011

2011

2010

2010

2009

Rs. in million

2009
0

5,000

10,000

15,000

Other income
Net sales

Annual Report/2014

20,000

25,000

30,000

35,000

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Selling & general expenses


Financial expenses
Cost of sales

40

Comments on Financial Analysis

Shareholders equity has almost doubled to Rs. 6,660 million as compared Rs. 3,118 million in FY 2009.

Property, plant and equipment have increased by Rs. 2,104 million to Rs. 8,210 million over the six years period. State-of-the-art
machinery has been inducted to improve the efficiency of production.

Over the last six years, net sales grew by 138% from Rs. 13,906 million in FY 2009 to Rs. 33,013 million in FY 2014. The growth
has more than doubled in the last six years. Export Sales have increased both in volume and price.

Finance cost as percentage of sales has gone down to 3.5% in FY2014 from 7.5% in FY 2009.

Profit after tax in FY 2014 has increased to Rs. 1,235 million as compared to Rs. 80 million in FY 2009. Earnings per share now
stand at Rs. 6.75 versus Rs. 0.73 in FY 2009.

During the six year period, the Company has paid 27.5% cash dividend and issued 145% bonus shares. In addition to the FY 2014
25% bonus shares and 15% cash dividend have been proposed. A Holding Company and an Associated Company have agreed
to relinquish their portion of cash dividend.

41

Annual Report/2014

Statement of Compliance with the Code of


Corporate Governance
This statement is being presented to comply with the Code of Corporate Governance (the CCG) contained in
the Listing Regulations of Karachi and Lahore Stock Exchanges for the purpose of establishing a framework of
good governance, whereby a listed company is managed in compliance with the best practices of corporate
governance.
The Company has applied the principles contained in the CCG in the following manner:
1.

The Company encourages representation of independent directors and directors representing the minority interest on its Board of
Directors (the Board). At present, the Board includes:
Independent Directors
S.M. Nadim Shafiqullah
Dr. Amjad Waheed
Adnan Afridi
Executive Directors
Zain Bashir
Mohammed Zaki Bashir
Non-Executive Directors
Mohomed Bashir
Ziad Bashir

The independent directors meet the criteria of independence under clause i (b) of the CCG.
2.

During the year, the Company has separated the positions of the Chairman and the Chief Executive Officer (CEO). The Chairman
is a non-executive director.

3.

The directors have confirmed that none of them is serving as a director in more than seven listed companies, including this
Company.

4.

All the resident directors of the Company are registered as taxpayers and none of them has defaulted in payment of any loan to a
banking company, a DFI or an NBFI or, being a member of a stock exchange, has been declared as a defaulter by that stock
exchange.

5.

No casual vacancy occurred on the Board during the year.

6.

The Company has prepared a Code of Conduct and Ethics and has ensured that appropriate steps have been taken to
disseminate it throughout the Company along with its supporting policies and procedures.

7.

The Board has developed a vision/mission statement, overall corporate strategy and significant policies of the Company. A
complete record of particulars of significant policies along with the dates on which they were approved or amended has been
maintained.

8.

All the powers of the Board have been duly exercised and decisions on material transactions, including appointment and
determination of remuneration and terms and conditions of employment of the Chief Executive Officer (CEO), other executive and
non-executive directors, have been taken by the Board/shareholders.

9.

The meetings of the Board were presided over by the Chairman and, in his absence, by a director elected by the Board for this
purpose and the Board met at least once in every quarter. Written notices of the Board meetings, along with agenda and working
papers, were circulated at least seven days before the meetings. The minutes of the meetings were appropriately recorded and
circulated.

Annual Report/2014

42

10. The directors of the Board are well aware of their duties and responsibilities as outlined by corporate laws and listing regulations.
In compliance with the provisions of the Listing Regulations, four directors have attended and completed Corporate Governance
Leadership Skills Program under the Board Development Series of Pakistan Institute of Corporate Governance (PICG).
11. During the year, Mr. Mohan Khemjee was appointed as Head of Internal Audit in place of Mr. Rizwan Siddique. No new
appointment of Chief Financial Officer (CFO) and Company Secretary was made during the year. The Board has approved
appointment of CFO, Company Secretary and Head of Internal Audit, including their remuneration and terms and conditions of
employment.
12. The directors' report for this year has been prepared in compliance with the requirements of the CCG and fully describes the salient
matters required to be disclosed.
13. The financial statements of the Company were duly endorsed by CEO and CFO before approval of the Board.
14. The directors, CEO and executives do not hold any interest in the shares of the Company other than that disclosed in the pattern
of shareholding.
15. The Company has complied with all the corporate and financial reporting requirements of the CCG.
16. The Board has formed an Audit Committee. It comprises three members, all members are non-executive directors. The Chairman
of the Committee is an independent director.
17. The meetings of the Audit Committee were held at least once every quarter prior to approval of interim and final results of the
Company and as required by the CCG. The terms of reference of the Committee have been formed and advised to the Committee
for compliance.
18. The Board has formed an HR and Remuneration Committee. It comprises three members, of whom two are non-executive
directors. The Chairman of the Committee is non-executive director.
19. The Board has set up an effective internal audit function. This function has been outsourced to Anjum Asim Shahid Rahman,
Chartered Accountants, who are considered suitably qualified and experienced for the purpose and are conversant with the
policies and procedures of the Company.
20. The statutory auditors of the Company have confirmed that they have been given a satisfactory rating under the quality control
review program of the Institute of Chartered Accountants of Pakistan (ICAP), that they or any of the partners of the firm, their
spouses and minor children do not hold shares of the Company and that the firm and all its partners are in compliance with
International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the ICAP.
21. The statutory auditors or the persons associated with them have not been appointed to provide other services except in
accordance with the Listing Regulations and the auditors have confirmed that they have observed IFAC guidelines in this regard.
22. The closed period, prior to the announcement of interim/final results, and business decisions, which may materially affect the
market price of Companys securities, was determined and intimated to directors, employees and Karachi and Lahore Stock
Exchanges.
23. Material/price sensitive information has been disseminated among all market participants at once through Karachi and Lahore
Stock Exchanges.
24. We confirm that all other material principles enshrined in the CCG have been complied with.
MOHOMED BASHIR
Chairman

MOHAMMED ZAKI BASHIR


Chief Executive Officer

Karachi
September 27, 2014
43

Annual Report/2014

Notice of Annual General Meeting


Notice is hereby given that the 62nd Annual General Meeting of Gul Ahmed Textile Mills Limited will be held at Moosa D. Dessai ICAP
Auditorium, Institute of Chartered Accountants of Pakistan, G-31/8, Chartered Accountants Avenue, Clifton, Karachi, on Thursday,
October 30, 2014 at 9:30 a.m. to transact the following business:
1.

To receive, consider and adopt the Audited Accounts of the Company for the year ended June 30, 2014 together with the Directors
and Auditors Reports thereon.

2.

To approve the following:


a) Payment of cash dividend @ Rs.1.50 per share i.e.,15% for the year ended June 30, 2014 as recommended by the Board of
Directors. A Holding Company and an Associated Company have agreed to relinquish their portion of cash dividend.
b) Issue of bonus shares in the ratio of One share for every Four shares held i.e., 25% as recommended by the Board.

3.

To appoint Auditors for the year 2014-2015 and fix their remuneration.
By Order of the Board

Karachi
September 27, 2014
NOTES :

Mohammed Salim Ghaffar


Company Secretary

1.

Share Transfer Books of the Company will remain closed from October 23, 2014 to October 30, 2014 (both days inclusive) for determining
entitlement to the cash dividend and bonus shares.

2.

A member entitled to vote at the meeting may appoint a proxy. Proxies in order to be effective, must be received at the Registered Office of the
Company duly stamped and signed not later than 48 hours before the meeting.

3.

Shareholders who have deposited their shares into Central Depository Company of Pakistan Limited (CDC), must bring their original
Computerized National Identity Card (CNIC) or Original Passport at the time of attending the meeting. If proxies are granted by such shareholders
the same must be accompanied with attested copies of the CNIC or the Passport of the beneficial owners. Representatives of corporate members
should bring the usual documents required for such purpose.

4.

A proxy must be a member of the Company.

5.

In order to comply with the requirements of SECP SRO 831 (1)/2012 dated July 2, 2012, members who hold shares in physical form and have
not yet submitted photocopy of their CNIC are requested to send the same to the Share Registrar of the Company FAMCO Associates (Private)
Limited, 8-F, Next to Hotel Faran, Nursery, Block-6, P.E.C.H.S., Shahra-e-Faisal, Karachi at the earliest. CDC shareholders are requested to
submit their CNIC directly to their broker (participant)/CDC Investor account services.

6.

Shareholders who hold shares in physical form are requested to provide option for dividend mandate to our share registrar in order to comply with
the requirements of SECP Circular 18 of 2012 dated June 5, 2012. CDC shareholders are requested to submit their dividend mandate directly to
their broker (participant)/CDC Investor account services.

7.

SECP vide SRO 787 (1)/2014 dated September 8, 2014 has provided an option for shareholders to receive audited financial statements along
with notice of annual general meeting electronically through email. Hence, members who hold shares in physical form and are interested in
receiving the annual reports and notice of annual general meeting electronically in the future are required to submit their email addresses and
consent for electronic transmission to the share registrar of the Company. CDC shareholders are requested to submit their email address and
consent directly to their broker (participant)/CDC Investor account services.

8.

In compliance with SECP notification No.634 (1)/2014 dated July 10, 2014, the audited financial statements and reports of the Company for the
year ended June 30, 2014 are being placed on the Companys website: www.gulahmed.com for the information and review of shareholders.

9.

This is to inform the shareholders that the Government through its Fiscal Budget for 2014-15, announced that withholding tax rate on Dividend
Income has been increased from 10% to 15% for non-filers. The shareholders are requested to submit a copy of their National Tax Number (NTN)
Certificate to the Share Registrar of the Company in case of physical shareholding or to the CDC who are maintaining shareholding in Electronic
Form. Those shareholders, who do not provide copy of their NTN Certificate, will be subject to 15% withholding tax deduction on dividend.

10. Shareholders who hold shares in physical form are requested to immediately notify the change of address, if any, to the Share Registrar of the
Company. CDC shareholders are requested to notify the change of address, directly to their broker (participant)/CDC Investor account services.

Annual Report/2014

44

Review Report to the Members on Statement of Compliance


with Best Practices of the Code of Corporate Governance
We have reviewed the Statement of Compliance with the best practices contained in the Code of Corporate Governance for the year
ended June 30, 2014 prepared by the Board of Directors of Gul Ahmed Textile Mills Limited (the Company) to comply with the Listing
Regulations of the respective Stock Exchanges, where the Company is listed.
The responsibility for compliance with the Code of Corporate Governance is that of the Board of Directors of the Company. Our
responsibility is to review, to the extent where such compliance can be objectively verified, whether the Statement of Compliance
reflects the status of the Companys compliance with the provisions of the Code of Corporate Governance and report if it does not. A
review is limited primarily to inquiries of the Company personnel and review of various documents prepared by the Company to comply
with the Code.
As part of our audit of financial statements we are required to obtain an understanding of the accounting and internal control systems
sufficient to plan the audit and develop an effective audit approach. We have not carried out any special review of the internal control
system to enable us to express an opinion as to whether the Boards statement on internal control covers all controls and the
effectiveness of such internal controls.
Further, the Listing Regulations require the Company to place before the Board of Directors for their consideration and approval related
party transactions distinguishing between transactions carried out on terms equivalent to those that prevail in arms length transactions
and transactions which are not executed at arms length price recording proper justification for using such alternate pricing mechanism.
Further, all such transactions are also required to be separately placed before the audit committee. We are only required and have
ensured compliance of requirement to the extent of approval of related party transactions by the Board of Directors and placement of
such transactions before the audit committee. We have not carried out any procedures to determine whether the related party
transactions were undertaken at arms length price or not.
Based on our review nothing has come to our attention which causes us to believe that the Statement of Compliance does not
appropriately reflect the Companys compliance, in all material respects, with the best practices contained in the Code of Corporate
Governance, applicable to the Company for the year ended June 30, 2014.

Karachi
September 27, 2014

45

KRESTON HYDER BHIMJI & CO.


Chartered Accountants
Engagement Partner: Shaikh Mohammad Tanvir

Annual Report/2014

Auditors Report to the Members


We have audited the annexed Balance Sheet of Gul Ahmed Textile Mills Limited (the Company) as at June 30, 2014 and the related
Profit and Loss Account, Statement of Comprehensive Income, Cash Flow Statement and Statement of Changes in Equity together with
the notes forming part thereof, for the year then ended and we state that we have obtained all the information and explanations which,
to the best of our knowledge and belief, were necessary for the purposes of our audit.
It is the responsibility of the Companys management to establish and maintain a system of internal control, and prepare and present
the above said statements in conformity with the approved accounting standards and the requirements of the Companies Ordinance,
1984. Our responsibility is to express an opinion on these statements based on our audit.
We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards require that we plan and
perform the audit to obtain reasonable assurance about whether the above said statements are free of any material misstatement. An
audit includes examining on a test basis, evidence supporting the amounts and disclosures in the above said statements. An audit also
includes assessing the accounting policies and significant estimates made by management, as well as, evaluating the overall
presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion and, after due verification,
we report that:
(a) in our opinion, proper books of account have been kept by the Company as required by the Companies Ordinance, 1984;
(b) in our opinion:
i)

the Balance Sheet and Profit and Loss account together with the notes thereon have been drawn up in conformity with the
Companies Ordinance, 1984, and are in agreement with the books of account and are further in accordance with
accounting policies consistently applied except for changes described in note no. 4, with which we concur;

ii)

the expenditure incurred during the year was for the purpose of the Companys business; and

iii) the business conducted, investments made and the expenditure incurred during the year were in accordance with the
objects of the Company;
(c) in our opinion and to the best of our information and according to the explanations given to us, the Balance Sheet Profit and
Loss Account, Statement of Comprehensive Income, Cash Flow Statement and Statement of Changes in Equity together with
the notes forming part thereof conform with approved accounting standards as applicable in Pakistan, and give the information
required by the Companies Ordinance, 1984, in the manner so required and respectively give a true and fair view of the state
of the Company's affairs as at June 30, 2014 and of the profit, total comprehensive income, its cash flows and changes in
equity for the year then ended; and
(d) in our opinion no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980).

Karachi
September 27, 2014

Annual Report/2014

KRESTON HYDER BHIMJI & CO.


Chartered Accountants
Engagement Partner: Shaikh Mohammad Tanvir

46

2014
Note

2013
Rs. 000s

EQUITY AND LIABILITIES


SHARE CAPITAL AND RESERVES
Share capital

1,828,182

1,523,486

Revenue reserve

3,580,000

3,180,000

1,251,721

725,016

6,659,903

5,428,502

2,239,239

2,154,999

Deferred taxation - net

332,921

316,028

Staff retirement benefits

39,512

33,637

372,433

349,665

6,303,992

4,211,618

Unappropriated profit

NON-CURRENT LIABILITIES
Long term financing
Deferred liabilities

CURRENT LIABILITIES
Trade and other payables
Accrued mark-up/profit

11

177,164

191,792

Short term borrowings

12

7,829,770

8,290,416

Current maturity of long term financing

694,706

561,938

15,005,632

13,255,764

24,277,207

21,188,930

CONTINGENCIES AND COMMITMENTS

47

10

13

Annual Report/2014

2014
Note

2013
Rs. 000s

ASSETS
NON-CURRENT ASSETS
Property, plant and equipment

14

8,209,553

7,132,112

Intangible assets

15

20,365

23,130

Long term investment

16

58,450

58,450

Long term loans and advances

17

Long term deposits

11,901

2,061

81,034

51,312

8,381,303

7,267,065

723,435

CURRENT ASSETS
Stores, spare parts and loose tools

18

855,530

Stock-in-trade

19

11,914,365

9,555,224

Trade debts

20

1,366,694

2,573,268

Loans and advances

21

395,953

346,429

72,778

28,172
173,714

Short term prepayments


Other receivables

22

342,300

Tax refunds due from Government

23

653,481

229,454

179,849

190,248

Income tax refundable-payments less provision


Cash and bank balances

24

114,954

101,921

15,895,904

13,921,865

24,277,207

21,188,930

The annexed notes 1 - 46 form an integral part of these financial statements.

MOHOMED BASHIR
Chairman

Annual Report/2014

MOHAMMED ZAKI BASHIR


Chief Executive Officer

48

2014
Note

2013
Rs. 000s
Re-stated

Sales

25

33,012,724

30,242,719

Cost of sales

26

27,036,675

25,491,927

5,976,049

4,750,792

Gross profit

Distribution cost

27

2,122,660

1,509,886

Administrative expenses

28

1,313,920

1,086,920

Other operating expenses

29

Other income

30

Operating profit
Finance cost

31

Profit before taxation


Provision for taxation

32

Profit after taxation

Earnings per share - basic and diluted (Rs.)

33

116,197

72,356

3,552,777

2,669,162

2,423,272

2,081,630

235,555

38,558

2,658,827

2,120,188

1,162,850

1,268,651

1,495,977

851,537

261,179

140,474

1,234,798

711,063

6.75

4.09

The annexed notes 1 - 46 form an integral part of these financial statements.

MOHOMED BASHIR
Chairman

49

MOHAMMED ZAKI BASHIR


Chief Executive Officer

Annual Report/2014

2014

2013
Rs. 000s
Re-stated

Profit after taxation

1,234,798

711,063

(3,910)
513
(3,397)

(10,409)
1,424
(8,985)

1,231,401

702,078

Other comprehensive income


Items that will not be reclassified to profit and loss
account subsequently
Remeasurement loss on defined benefit plan
Tax effect on remeasurement loss

Total comprehensive income

The annexed notes 1 - 46 form an integral part of these financial statements.

MOHOMED BASHIR
Chairman

Annual Report/2014

MOHAMMED ZAKI BASHIR


Chief Executive Officer

50

2014
Note

2013
Rs. 000s
Re-stated

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation


Adjustments for:
Depreciation
Amortisation
Provision for gratuity
Finance cost
Provision for slow moving/obsolete items
Provision for doubtful debts
Property, plant and equipment scrapped
Gain on sale of property, plant and equipment - net
Cash flows from operating activities before adjustments of working capital
Changes in working capital:
(Increase)/decrease in current assets
Stores, spare parts and loose tools
Stock-in-trade
Trade debts
Loans and advances
Short term prepayments
Other receivables
Tax refunds due from Government
Increase in current liabilities
Trade and other payables

Adjustment for:
Gratuity paid
Finance cost paid
Income tax paid
(Increase)/decrease in long term loans and advances
Increase in long term deposits

Net cash generated from/(used in) operating activities

1,495,977

851,537

848,978
11,253
26,878
1,162,850
17,952
30,775
4,421
(106,134)
1,996,973
3,492,950

767,708
12,209
14,544
1,268,651
15,011
29,825
5,489
(17,080)
2,096,357
2,947,894

(150,047)
(2,359,141)
1,175,799
(49,524)
(44,606)
(168,586)
(424,027)
(2,020,132)

1,540
(2,139,773)
(528,934)
(176,817)
(811)
8,985
(204,583)
(3,040,393)

2,092,374
72,242
3,565,192

1,494,628
(1,545,765)
1,402,129

(24,913)
(1,177,478)
(233,374)
(9,840)
(29,722)
(1,475,327)

(15,210)
(1,248,471)
(296,890)
839
(3,511)
(1,563,243)

2,089,865

(161,114)

(1,966,561)
(8,488)
141,855
(1,833,194)

(1,139,216)
(5,289)
76,393
(1,068,112)

CASH FLOWS FROM INVESTING ACTIVITIES


Addition to property, plant and equipment
Addition to intangible assets
Proceeds from sale of property, plant and equipment
Net cash used in investing activities

51

Annual Report/2014

2014
Note

2013
Rs. 000s
Re-stated

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long term financing


Repayments of long term financing
Proceeds from issue of right shares

789,322
(572,314)
-

619,510
(663,641)
253,915

Net cash generated from financing activities

217,008

209,784

Net increase/(decrease) in cash and cash equivalents

473,679

(1,019,443)

(8,188,495)

(7,169,052)

(7,714,816)

(8,188,495)

Cash and cash equivalents - at the beginning of the year


Cash and cash equivalents - at the end of the year

35

The annexed notes 1 - 46 form an integral part of these financial statements.

MOHOMED BASHIR
Chairman

Annual Report/2014

MOHAMMED ZAKI BASHIR


Chief Executive Officer

52

Revenue
reserve

Share
Capital

(Accumulated loss)/
Unappropriated profit

Total

Rs. 000s
Balance as at June 30, 2012

3,430,000

(227,062)

(250,000)

250,000

Profit for the year - as re-stated

711,063

711,063

Other comprehensive income - as re-stated

(8,985)

(8,985)

702,078

702,078

253,915

253,915

Transfer from revenue reserve

1,269,571

4,472,509

Total comprehensive income


for the year ended June 30, 2013 - as re-stated

Transaction with owners


Issue of right shares
Balance as at June 30, 2013

3,180,000

725,016

400,000

(400,000)

Profit for the year

1,234,798

1,234,798

Other comprehensive income

(3,397)

(3,397)

1,231,401

1,231,401

304,696

(304,696)

Transfer to revenue reserve

1,523,486

5,428,502
-

Total comprehensive income for the


year ended June 30, 2014

Transaction with owners


Issue of bonus shares
Balance as at June 30, 2014

1,828,182

3,580,000

1,251,721

6,659,903

The annexed notes 1 - 46 form an integral part of these financial statements.

MOHOMED BASHIR
Chairman

53

MOHAMMED ZAKI BASHIR


Chief Executive Officer

Annual Report/2014

1.

LEGAL STATUS AND ITS OPERATIONS


1.1

Gul Ahmed Textile Mills Limited (The Company) was incorporated on April 01, 1953 in Pakistan as a private
limited company, converted into public limited company on January 07, 1955 and was listed on Karachi and
Lahore Stock Exchanges in 1970 and 1971, respectively. The Company is a composite textile mill and is engaged
in the manufacture and sale of textile products.
The Companys registered office is situated at Plot No. 82, Main National Highway, Landhi, Karachi.
The Company is a subsidiary of Gul Ahmed Holdings (Private) Limited note no. 5.2.1.

2.

BASIS OF PREPERATION
2.1

Basis of measurement
These financial statements comprise of balance sheet, profit and loss account, statement of comprehensive
income, cash flow statement and statement of changes in equity together with explanatory notes and have been
prepared under the historical cost convention except as has been specifically stated below in respective notes.

2.2

Statement of compliance
These financial statements have been prepared in accordance with approved accounting standards as applicable
in Pakistan. Approved accounting standards comprises of such International Financial Reporting Standards
(IFRS) issued by the International Accounting Standards Board, as are notified under the Companies Ordinance,
1984, provisions of and directives issued under the Companies Ordinance, 1984. In case requirements differ,
the provisions or directives of the Companies Ordinance, 1984 shall prevail.

2.3

Functional and presentation currency


These financial statements have been prepared in Pak Rupees, which is the Company's functional currency.
All financial information presented in Pak Rupees has been rounded to nearest thousand.

2.4

Critical accounting estimates and judgments


The preparation of financial statements in conformity with approved accounting standards requires the use of
certain critical accounting estimates. It also requires the management to exercise its judgment in the process
of applying the Company's accounting policies. Estimates and judgments are continually evaluated and are
based on historical experience including expectations of future events that are believed to be reasonable under
the circumstances. The areas involving a higher degree of judgment or complexity or areas where assumptions
and estimates are significant to the financial statements, are as follows:
Defined benefit plan
Actuarial assumptions have been adopted as disclosed in note no. 9 to the financial statements for valuation of
present value of defined benefit obligations.
Contingencies
The assessment of the contingencies inherently involves the exercise of significant judgment as the outcome
of the future events cannot be predicted with certainty. The Company, based on the availability of the latest
information, estimates the value of contingent assets and liabilities which may differ on the occurrence/nonoccurrence of the uncertain future event(s).
Useful lives, pattern of economic benefits and impairments
Estimate with respect to residual values and useful lives and patterns of flow of economic benefits are based
on the analysis of managenmet of the Company. Further, the Company reviews the value of assets for possible
impairment on an annual basis. Any change in the estimate in the future might effect the carrying amount of
respective item of property, plant and equipment with the corresponding effect on the depreciation charge and
impairment.

Annual Report/2014

54

Intangibles
The Company reviews appropriateness of useful life. Further, where applicable, an estimate of recoverable
amount of intangible asset is made for possible impairment on an annual basis.
Impairment of investment in subsidiary company
In making an estimate of recoverable amount of the Company's investment in subsidiary company, the
management considers break-up value of shares as per audited accounts of respective period.
Provision for obsolescence and slow moving spare parts and loose tools
Provision for obsolescence and slow moving spare parts is based on parameters set out by management.
Stock-in-trade
The Company reviews the net realisable value of stock-in-trade to assess any diminution in the respective
carrying values. Net realisable value is determined with reference to estimated currently prevailing selling
price/market price less estimated expenditures to make the sales.
Provision against trade debts, advances and other receivables
The Company reviews the recoverability of its trade debts, advances and other receivables to assess amount
of bad debts and provision required there against on annual basis. While determining provision, the Company
considers financial health, market information, ageing of receivables, credit worthiness, credit rating, past records
and business relationship.
Taxation
The Company takes into account relevant provisions of the prevailing income tax laws while providing for current
and deferred taxes as explained in note no. 3.5 of these financial statements. Deferred tax calculation has been
made based on estimate of expected future ratio of export and local sales based on past history.
2.5

Adoption of new and revised standards and interpretations


a

New and amended standards and interpretations became effective:


During the year, certain amendments to standards & revised standards have become effective; however,
they are either irrelevant or did not have material effect on these financial statements except for the effects
of Revised IAS-19 Employee Benefits as stated in note no. 4. Amendments/revision are as follows;

55

IAS-19

Employee Benefits - The amendment removes the options for accounting for the liability and
requires that the liabilities arising from such plans is recognized in full with actuarial gains and
losses being recognized in other comprehensive income (elimination of corridor method for
recognition of actuarial gains and losses). It also revised the method of calculating the return on
plan assets. The revised standard changes the definition of short-term employee benefits. The
distinction between short-term and other long-term employee benefits is now based on whether
the benefits are expected to be settled wholly within 12 months after the reporting date.

IFRS-7

Financial Instruments: Disclosures - Disclosures about offsetting of financial assets and


liabilities; these amendments require entities to disclose gross amount subject to right of set off,
amounts set off in accordance with accounting standards followed and the related net credit
exposure. These disclosures are intended to facilitate the evaluation of the effect or potential
effect of netting arrangements on an entitys financial position.

Annual Report/2014

IAS-27

IAS-28

Separate Financial Statements (2011) - Amendment; The Standard requires that when an entity
prepares separate financial statements, investments in subsidiaries, associates and jointly
controlled entities are accounted for either at cost or in accordance with IFRS 9 Financial
Instruments/IAS 39 Financial Instruments: Recognition and Measurement. The Standard also
deals with the recognition of dividends, certain group reorganizations and includes a number of
disclosure requirements.
Investments in Associates and Joint Ventures - Amendment; This Standard supersedes IAS
28 Investments in Associates and prescribes the accounting for investments in associates and
sets out the requirements for the application of the equity method when accounting for investments
in associates and joint ventures. The Standard defines 'significant influence' and provides guidance
on how the equity method of accounting is to be applied (including exemptions from applying the
equity method in some cases). It also prescribes how investments in associates and joint ventures
should be tested for impairment.

Standards, Interpretations and Amendments not yet effective


The following standards, amendments and interpretations of approved accounting standards will be effective
for accounting periods beginning on or after 01 July 2014:
IFRIC 21- Levies, an Interpretation on the accounting for levies imposed by governments (effective
for annual periods beginning on or after 01 January 2014).
IFRIC 21 is an interpretation of IAS 37 Provisions, Contingent Liabilities and Contingent Assets.
IAS 37 sets out criteria for the recognition of a liability, one of which is the requirement for the
entity to have a present obligation as a result of a past event (known as an obligating event). The
interpretation clarifies that the obligating event that gives rise to a liability to pay a levy is the
activity described in the relevant legislation that triggers the payment of the levy.
Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities - (effective for annual
periods beginning on or after 01 January 2014).
The amendments address inconsistencies in current practice when applying the offsetting criteria in IAS
32 Financial Instruments: Presentation. The amendments clarify the meaning of currently has a legally
enforceable right of set-off; and that some gross settlement systems may be considered equivalent to net
settlement.
Amendment to IAS 36 Impairment of Assets Recoverable Amount Disclosures for Non-Financial Assets
(effective for annual periods beginning on or after 01 January 2014).
These narrow-scope amendments to IAS 36 Impairment of Assets address the disclosure of information
about the recoverable amount of impaired assets if that amount is based on fair value less costs of disposal.
Amendments to IAS 39 Financial Instruments: Recognition and Measurement Continuing hedge
accounting after derivative novation (effective for annual periods beginning on or after 01 January, 2014).
The amendments add a limited exception to IAS 39, to provide relief from discontinuing an existing hedging
relationship when a novation that was not contemplated in the original hedging documentation
meets specific criteria.
Amendments to IAS 19 Employee Benefits Employee contributions - a practical approach (effective
for annual periods beginning on or after 01 July 2014).
The practical expedient addresses an issue that arose when amendments were made in 2011 to the
previous pension accounting requirements. The amendments introduce a relief that will reduce the complexity
and burden of accounting for certain contributions from employees or third parties. The amendments are
relevant only to defined benefit plans that involve contributions from employees or third parties meeting
certain criteria.

Annual Report/2014

56

Amendments to IAS 38 Intangible Assets and IAS 16 Property, Plant and Equipment (effective for
annual periods beginning on or after 01 January 2016).
This amendment introduces severe restrictions on the use of revenue-based amortization for intangible
assets and explicitly states that revenue-based methods of depreciation cannot be used for property, plant
and equipment. The rebuttable presumption that the use of revenue-based amortization methods for
intangible assets is inappropriate can be overcome only when revenue and the consumption of the economic
benefits of the intangible asset are highly correlated or when the intangible asset is expressed as a
measure of revenue.
These amendments to the standards are either irrelevant or will not have any material effect on the
Companys financial statements.
c

Annual Improvements 2010-2012 and 2011-2013 cycles (most amendments will apply prospectively for
annual period beginning on or after 01 July 2014). The new cycle of improvements contains amendments
to the following standards:
IFRS 2

Share-Based Payment; IFRS 2 has been amended to clarify the definition of vesting condition
by separately defining performance condition and service condition. The amendment also clarifies
both: how to distinguish between a market condition and a non-market performance condition and
the basis on which a performance condition can be differentiated from a vesting condition.

IFRS 3

Business Combinations; These amendments clarify the classification and measurement of


contingent consideration in a business combination. Further, IFRS 3 has also been amended
to clarify that the standard does not apply to the accounting for the formation of all types of joint
arrangements including joint operations in the financial statements of the joint arrangement
themselves.

IFRS 8

Operating Segments has been amended to explicitly require the disclosure of judgments
made by management in applying the aggregation criteria. In addition, this amendment clarifies
that a reconciliation of the total of the reportable segments assets to the entity assets is required
only if this information is regularly provided to the entitys chief operating decision maker. This
change aligns the disclosure requirements with those for segment liabilities.

Amendments to IAS 16 Property, plant and equipment and IAS 38 Intangible assets. The amendments
clarify the requirements of the revaluation model in IAS 16 and IAS 38, recognizing that the restatement
of accumulated depreciation (amortization) is not always proportionate to the change in the gross carrying
amount of the asset.
IAS 24

Related Party Disclosure. The definition of related party is extended to include a management
entity that provides key management personnel services to the reporting entity, either directly
or through a group entity.

IAS 40

Investment Property. IAS 40 has been amended to clarify that an entity should: assess
whether an acquired property is an investment property under IAS 40 and perform a separate
assessment under IFRS 3 to determine whether the acquisition of the investment property
constitutes a business combination.

These amendments/clarification are not likely to have any material impact on the Companys financial statements.
d

New Standards issued by IASB and notified by SECP but not yet effective
Following new standards issued by IASB have been adopted by the Securities and Exchange Commission
of Pakistan for the purpose of applicability in Pakistan through SRO 633(1)/2014 dated July 10, 2014 and will
be effective for annual periods beginning on or after January 01, 2015.

57

Annual Report/2014

IFRS 10

Consolidated Financial Statements


This is a new standard that replaces the consolidation requirements in SIC - 12 Consolidation:
Special Purpose Entities and IAS 27 - Consolidated and Separate Financial Statements. The
proposed standard builds on existing principles by identifying the concept of control as the
determining factor in whether an entity should be included within the consolidated financial
statements of the parent company and provides additional guidance to assist in the determination
of control where this is difficult to assess.

IFRS 11

Joint Arrangements
This is a new standard that deals with the accounting for joint arrangements and focuses on
the rights and obligations of the arrangements, rather than its legal form. Standard requires a
single method for accounting for interests in jointly controlled entities.

IFRS 12

Disclosure of Interest in Other Entities


This is a new and comprehensive standard on disclosure requirements for all forms of interests
in other entities including joint arrangements, associates, special purpose vehicles and other
off balance sheet vehicles.

IFRS 13

Fair Value Measurement


This standard applies to IFRSs that require or permit fair value measurement or disclosures
and provides a single IFRS framework for measuring fair value and requires disclosures about
fair value measurement. The standard defines fair value on the basis of an 'exit-price' notion
and uses 'a fair value hierarchy', which results in market-based, rather than entity-specific
measurement.

These new standards are either irrelevant or will not have any material effect on the Companys financial statements.
3.

SIGNIFICANT ACCOUNTING POLICIES


3.1

Foreign currency transactions and translation


All monetary assets and liabilities denominated in foreign currencies are translated into Pak Rupees at the rates
of exchange prevailing at the balance sheet date or as fixed under contractual arrangements.
All non-monetary items are translated into Pak Rupees at the rates on date of transaction or on the date when
fair values are determined.
Transactions in foreign currencies are translated into Pak Rupees at exchange rate prevailing at the date of
transaction or as fixed under contractual arrangement.
Foreign exchange gains and losses on translation are recognized in the profit and loss account.

3.2

Staff retirement benefits


Defined benefit plan
The Company operates unfunded gratuity schemes for all its eligible employees who are not part of the provident
fund scheme. Benefits under the scheme are payable to employees on completion of the prescribed qualifying

Annual Report/2014

58

period of service under the scheme. Actuarial valuation is conducted periodically using the "Projected Unit
Credit Method" and the latest valuation was carried out as at June 30, 2014. The results of valuation are
summarized in note no. 9.
Actuarial gains and losses arising at each valuation date are recognized immediately in other comprehensive
income.
Benefits under the scheme are payable to employees on completion of the prescribed qualifying period of
service under the scheme.
Defined contribution plan
The Company operates a recognized provident fund scheme for its eligible employees to which equal monthly
contribution is made by the Company and the employees at the rate of 8.33% of the basic salary.
3.3

Accumulated employee compensated absences


The Company provides for compensated absences for all eligible employees in the period in which these are
earned in accordance with the rules of the Company.

3.4

Provisions
Provisions are recognized when the Company has present obligation (legal or constructive) as a result of past
event and it is probable that an outflow of resources embodying economic benefits will be required to settle
the obligation and a reliable estimate can be made of the amount of the obligation.
Provisions are reviewed at each balance sheet date and adjusted to reflect current best estimate.

3.5

Taxation
Current
Provision for current tax is based on the taxable income for the year determined in accordance with the prevailing
law for taxation of income. The charge for current tax is calculated using prevailing tax rates or tax rates expected
to apply to the profit for the year. The charge for current tax also includes adjustments, where considered
necessary, to provision for taxation made in previous years arising from assessments framed during the year
for such years. The Company takes into account the current Income Tax law and decisions taken by the Taxation
Authorities.
Deferred
Deferred tax is accounted for using the balance sheet liability method in respect of all temporary
differences arising from differences between the carrying amount of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities
are recognized for all taxable temporary differences and deferred tax assets are recognized to the extent that
it is probable that taxable profits will be available against which the deductible temporary differences, unused
tax losses and tax credits can be utilized. Deferred tax assets are reduced to the extent that it is no longer
probable that the related tax benefit will be realized.
Deferred tax is calculated at the rates that are expected to apply to the period when the differences reverse,
based on tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax
is charged or credited in the profit and loss account, except that it relates to items recognized in other
comprehensive income or directly in equity. In this case tax is also recognized in other comprehensive income
or directly in equity, respectively.

59

Annual Report/2014

3.6

Borrowings
Borrowings are recorded at the amount of proceeds received.

3.7

Borrowing cost
Borrowing costs are recognized as an expense in the period in which these are incurred except to the extent
of borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying
asset. Such borrowing costs are capitalized as part of the cost of that asset up to the date of its commissioning.

3.8

Trade and other payables


Liabilities for trade and other payables are carried at cost which is the fair value of the consideration to be paid
in the future for goods and services received.

3.9

Property, plant and equipment


Operating fixed assets
Operating fixed assets are stated at cost less accumulated depreciation and any identified impairment loss
except leasehold land which is stated at cost.
Depreciation is charged on reducing balance method and straight line method on class of items at rates specified
in the note no. 14.1. Depreciation is charged on additions on monthly basis i.e. from the month in which it is
capitalized till the month of its disposal. Depreciation is charged on the assets even if the assets are idle.
Subsequent costs are included in the assets carrying amount or recognized as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Company and
the cost of the item can be measured reliably. All other repair and maintenance costs are charged to profit
and loss account during the period in which they are incurred.
Gains and losses on disposal of operating assets are included in profit and loss account.
The costs of replacing part of an item of property, plant and equipment is recognised in the carrying amount
of the item if it is probable that the future economic benefits associated with the part will flow to the Company
and its cost can be measured reliably.
The costs of day-to-day servicing of property, plant and equipment are recognized in profit or loss as incurred.
Capital work-in-progress
Capital work-in-progress is stated at cost accumulated up to the balance sheet date less impairment, if any.
Cost represents expenditure incurred on property, plant and equipment in the course of construction, acquisition,
installation, development and implementation. These expenditures are transferred to relevant category of
property, plant and equipment as and when the assets start operation.

3.10

Intangible assets
Intangible assets are stated at cost less accumulated amortisation and impairment, if any. Amortisation is charged
over the useful life of the assets on a systematic basis to income by applying the straight line method at the rate
specified in note no. 15.

Annual Report/2014

60

Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's
carrying amount exceeds its recoverable amount. The recoverable amount is higher of an assets' fair value less
costs to sell and value in use.
3.11

Investment in subsidiary
Investment in subsidiary company is stated at cost. The Company periodically considers the carrying amount
of the investment to assess whether there is any indication of impairment loss. If such indication exists, the
carrying amount is reduced to recoverable amount and the difference is recognized as an expense. Where an
impairment loss subsequently reverses, the carrying amount of the investment is increased to the revised
recoverable amount. The reversal of such impairment loss is recognized as an income.

3.12

Loans and receivables


Financial assets which have fixed or determinable payments and are not quoted in an active market are classified
as loans and receivables. These are measured at amortised cost less impairment, if any.

3.13

Stores, spare parts and loose tools


Stores, spare parts and loose tools are stated at moving average cost less provision for slow moving/obsolete
items. Goods-in-transit are valued at invoice/purchase amount plus other costs incurred thereon up to balance
sheet date.

3.14

Stock-in-trade
Stock of raw materials, except for those in transit, work-in-process and finished goods are valued at lower of
weighted average cost and net realizable value. Waste products are valued at net realisable value. Cost of raw
materials and trading stock comprises of the invoice value plus other charges incurred thereon. Cost of workin-process and finished goods includes cost of direct materials, labour and appropriate portion of manufacturing
overheads. Items in transit are stated at cost comprising invoice value and other incidental charges paid thereon.
Net realizable value signifies the estimated selling prices in the ordinary course of business less costs necessarily
to be incurred in order to make the sale.

3.15

Trade debts
Trade debts are carried at original invoice amount except export receivables. Export trade debts are translated
into Pak Rupees at the rates ruling on the balance sheet date or as fixed under contractual arrangements. Debts
considered irrecoverable are written off and provision is made for debts considered doubtful.

3.16

Revenue recognition
Revenue is recognised to the extent it is probable that the economic benefits will flow to the Company and the
revenue can be measured reliably. Revenue is measured at the fair value of the consideration received or
receivable and is recognised on following basis:

61

Sale is recognised when the goods are dispatched to the customer and in case of export when the goods
are shipped. Revenue from sale of goods is measured at the fair value of consideration received or
receivable, net of returns and trade discounts.

Profit on deposits with banks is recognised on time proportion basis taking into account the amount
outstanding and rates applicable thereon.

Annual Report/2014

3.17

Duty draw back on export sales is recognized on an accrual basis at the time of export sale.
-

Processing charges are recorded when processed goods are delivered to customers and invoices raised.

Dividend income is recognised when the Company's right to receive the payment is established.

Interest on loans and advances to employees is recognised on receipt basis.

Financial Instruments
Financial instruments carried on the balance sheet include investments, deposits, trade debts, loans and
advances, other receivables, cash and bank balances, long-term financing, liabilities against assets subject to
finance lease, short-term borrowings, accrued mark-up and trade and other payables etc. Financial assets and
liabilities are recognized when the Company becomes a party to the contractual provisions of instrument. Initial
recognition is made at fair value plus transaction costs directly attributable to acquisition, except for financial
instruments at fair value through profit or loss.

3.18

Derecognition
Financial assets are derecognized when the Company looses control of the contractual rights that comprise
the financial asset. The Company looses such control if it realizes the rights to benefits specified in contract,
the rights expire or the Company surrenders those rights. Financial liabilities are derecognized when the
obligation specified in the contract is discharged, cancelled or expired. Any gain or loss on subsequent
measurement (except available for sale investments) and derecognition is charged to the profit or loss currently.

3.19

Impairment
Financial assets
A financial asset is assessed at each reporting date to determine whether there is any objective evidence that
it is impaired. A financial asset is considered to be impaired if objective evidence indicated that one or more
events have had a negative effect on the estimated future cash flows of that asset.
The Company considers evidence of impairment for receivable and other financial assets at specific asset level.
Impairment losses are recognised as expense in profit and loss account. An impairment loss is reversed only
to the extent that the asset's carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no impairment loss had been recognized.
Non-Financial assets
The carrying amount of non-financial assets is assessed at each reporting date to determine whether there is
any indication of impairment. If any such indication exists then the assets recoverable amount of such assets
is estimated. Recoverable amount is higher of an asset's fair value less cost to sell and value in use. An
impairment loss is recognised as expense in the profit and loss account for the amount by which asset's
carrying amount exceeds its recoverable amount.

3.20

Derivative financial instruments


The Company uses derivative financial instruments to hedge its risks associated with interest and exchange
rate fluctuations. Derivative financial instruments are carried as assets when fair value is positive and as liabilities
when fair value is negative. Any change in the fair value of the derivative financial instruments is taken to the
profit and loss account.

Annual Report/2014

62

3.21

Offsetting of financial assets and liabilities


All financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if the
Company has a legal enforceable right to set off the recognized amounts and intends either to settle on net
basis or to realize the assets and settle the liabilities simultaneously.

3.22

Cash and cash equivalents


The cash and cash equivalents comprises cash and cheques in hand and balances with banks on current,
savings and deposit accounts less short-term borrowings.

3.23

Dividend and appropriation to reserves


Final dividend distributions to the Company's shareholders are recognised as a liability in the financial statements
in the period in which the dividends are approved by the Company's shareholders at the Annual General Meeting,
while the interim dividend distributions are recognised in the period in which the dividends are declared by the
Board of Directors. Appropriations of profit are reflected in the statement of changes in equity in the period in
which such appropriations are approved.

3.24

Segment reporting
Segment reporting is based on the operating (business) segments of the Company. An operating segment is
a component of the Company that engages in business activities from which it may earn revenues and incur
expenses including revenues and expenses that relates to transactions with any of the Company's other
components. An operating segments operating results are reviewed regularly by the Chief Executive Officer
(CEO) to make decisions about resources to be allocated to the segment and assess its performance and for
which discrete financial information is available.
Segment results that are reported to the CEO include items directly attributable to a segment as well as those
that can be allocated on a reasonable basis. Unallocated items comprise mainly administrative and other
operating expenses and income tax assets and liabilities. Segment capital expenditure is the total cost incurred
during the period to acquire property, plant and equipment and intangible assets other than goodwill.

CHANGE IN ACCOUNTING POLICY


The revised IAS 19 "Employees Benefits" (Revised) have become effective for the Company's financial statements for
the year ended June 30, 2014. The amendments to IAS 19 changes the accounting for Defined Benefit Plan and
termination benefits. The significant changes are as follows:
Recognition
a

Actuarial gains and losses


The amendments require all remeasurement gains and losses (actuarial gains and losses) to be fully
recognised immediately through other comprehensive income. Previously, the Company fully recognised
actuarial gains and losses in the profit and loss account as allowed under the relevant provision of IAS 19.

Past service cost


Past service cost (either vested or non vested) is recognised in the profit and loss account as soon as the
change in the benefit plans are made. Previously, this was also recognised in the profit and loss account
as allowed by the relevant provision of the IAS 19.

63

Annual Report/2014

Presentation of Changes in Defined Benefit Obligation and Plan Assets


Presentation of changes in defined benefit obligation will be split into following components in our case:
i

Service cost
Recognised in profit and loss account and includes current and past service cost as well as gains or losses
on settlements.

ii

Re-measurement
Recognised in other comprehensive income and comprises actuarial gains and losses on the defined
benefit obligation.

Revised Accounting Policy of recognizing remeasurement Gain/Loss on Staff Retirement Benefits


- Defined Benefit Plans
The application of revised IAS 19 requires the change in Company's accounting policy in respect of actuarial
gains and losses to be accounted for retrospectively in accordance with International Accounting Standard 8
Accounting Policies, Changes in Accounting Estimates and Errors by reclassifying the figures of actuarial gains
and losses to other comprehensive income from profit and loss account and hence comparative
figures of profit and loss and other comprehensive income have been restated.
Effect of Change in Accounting Policy
Effect of retrospective application of change in Accounting policy are as follows:
Amounts as
previously
stated

Effect of
restatement

Amounts
as
re-stated

Rs. 000s
Effect on Profit & Loss Account for
the year ended June 30, 2013
Cost of sales
Taxation
Net profit before tax

25,502,336
139,050
702,078

(10,409)
1,424
8,985

25,491,927
140,474
711,063

(10,409)
1,424
(8,985)

(10,409)
1,424
(8,985)

0.06

4.90

Effect on Other Comprehensive Income


Remeasurement loss on defined benefit obligation
Impact of tax

Effect on Comparative Basic and Diluted EPS


Basic and Diluted EPS - Rupees per share

4.84

Further comparative EPS is also restated due to effect of issuance of bonus shares during the year as disclosed
in note no. 33.
Effect On Balance Sheet
The change in accounting policy has no effect on the balance sheet since the actuarial gains/losses were
already recorded through profit and loss account, therefore, third balance sheet presentation is not applicable.

Annual Report/2014

64

2014
5

2013
Rs. 000s

SHARE CAPIT AL
Authorised capital

5.1

2014
2013
Number of Shares
400,000,000

200,000,000

Ordinary shares of Rs.10 each

4,000,000

2,000,000

641,890

641,890

54,473

54,473

1,131,819

827,123

1,828,182

1,523,486

Issued, subscribed and paid-up capital

5.2

2014

2013

Number of Shares
64,188,985

64,188,985

5,447,326

5,447,326

113,181,907

82,712,204

182,818,218

Ordinary shares of Rs.10 each allotted


for consideration fully paid in cash
Ordinary shares of Rs.10 allotted as fully
paid under scheme of arrangement
for amalgamation
Ordinary shares of Rs.10 each allotted
as fully paid bonus shares

152,348,515

5.2.1

During the year certain major shareholders of the Company transferred their shares in one direction for group
formation to Gul Ahmed Holdings (Private) Limited (GAHPL); a company established and beneficially owned by
these transferors. Consequently, GAHPL now owns 67.45% shares of the Company and has become the holding
company of the Company.

5.2.2

As at June 30, 2014, 129,001,910 (2013: 107,457,082) ordinary shares of Rs.10 each are held by related parties.
2014
Note

5.2.3

(Number of Shares)

Reconciliation of the number of shares outstanding


Number of shares outstanding at the beginning of the year
Add: 20% Issue of bonus shares
Add: 20% Issue of right shares

6.

2013

152,348,515
30,469,703
182,818,218

126,957,096
25,391,419
152,348,515

Rs. 000s

REVENUE RESERVE
General reserve - opening
Transfer from/(to) unappropriated profit
6.1

3,180,000
400,000
3,580,000

3,430,000
(250,000)
3,180,000

7.1
7.2

598,511
2,335,434

646,103
2,070,834

2,933,945
(694,706)
2,239,239

2,716,937
(561,938)
2,154,999

6.1 This represents appropriation of profit in past years to meet future exigencies.
7

LONG TERM FINANCING - SECURED


From Banking Companies
Related party
Other banks
Current portion shown under current liabilities

65

Annual Report/2014

Particulars

7.1

Note

Number of
installments and
commencement
month

Installment
amount
Rs. 000s

Mark-up rate
per annum

2013
Rs. 000s

Related party

Habib Metropolitan Bank Limited Loan 1


a) Under LTF-EOP scheme

7.4, 7.6, 7.7

b) Under LTF-EOP scheme

12 half yearly
March-2010

684

7.00% p.a.
payable quarterly

2,047

3,414

12 half yearly
April-2010

2,042

7.00% p.a.
payable quarterly

6,123

10,206

19,417

7.00% p.a.
payable quarterly

77,665

116,498

Habib Metropolitan Bank Limited Loan 2


Under LTF-EOP scheme

7.4, 7.6, 7.7

12 half yearly
November-2010

Habib Metropolitan Bank Limited Loan 3


Under LTFF scheme

7.4, 7.6, 7.8

16 half yearly
February-2012

2,719

10.00% p.a.
payable quarterly

29,900

35,338

Habib Metropolitan Bank Limited Loan 4


Under LTFF scheme

7.4, 7.6, 7.8

16 half yearly
March-2012

2,504

10.00% p.a.
payable quarterly

27,545

32,553

Habib Metropolitan Bank Limited Loan 5


Under LTFF scheme

7.4, 7.6, 7.8

16 half yearly
June-2012

4,212

10.25% p.a.
payable quarterly

46,313

54,737

Habib Metropolitan Bank Limited Loan 6


Under LTFF scheme

7.4, 7.6, 7.8

16 half yearly
July-2012

1,804

10.25% p.a.
payable quarterly

21,644

25,252

Habib Metropolitan Bank Limited Loan 7


Under LTFF scheme

7.4, 7.6, 7.8

10 half yearly
December-2013

3,328

11.20% p.a.
payable quarterly

26,624

33,280

Habib Metropolitan Bank Limited Loan 8


Under LTFF scheme

7.4, 7.6, 7.8

10 half yearly
January-2014

970

12.70% p.a.
payable quarterly

8,721

9,691

Habib Metropolitan Bank Limited Loan 9


Under LTFF scheme

7.4, 7.6, 7.8

10 half yearly
February-2014

1,342

12.70% p.a.
payable quarterly

12,072

13,414

Habib Metropolitan Bank Limited Loan 10


Under LTFF scheme

7.4, 7.6, 7.8

10 half yearly
June-2014

9,618

12.70% p.a.
payable quarterly

86,562

96,180

Habib Metropolitan Bank Limited Loan 11


Under LTFF scheme

7.4, 7.6, 7.8

10 half yearly
August-2014

1,357

12.70% p.a.
payable quarterly

13,570

13,570

Habib Metropolitan Bank Limited Loan 12


Under LTFF scheme

7.4, 7.6, 7.8

10 half yearly
September-2014

3,392

12.70% p.a.
payable quarterly

33,920

33,920

Habib Metropolitan Bank Limited Loan 13


Under LTFF scheme

7.4, 7.6, 7.8

10 half yearly
October-2014

158

12.70% p.a.
payable quarterly

1,575

1,575

Habib Metropolitan Bank Limited Loan 14


Under LTFF scheme

7.4, 7.6, 7.8

10 half yearly
August-2015

2,959

11.40% p.a.
payable quarterly

29,590

29,590

Habib Metropolitan Bank Limited Loan 15


Under LTFF scheme

7.4, 7.6, 7.8

10 half yearly
September-2015

13,689

11.40% p.a.
payable quarterly

136,885

136,885

Habib Metropolitan Bank Limited Loan 16

7.4, 7.6, 7.8

10 half yearly
April-2016

3,776

11.40% p.a.
payable quarterly

37,755

598,511

646,103

Total due to Related Party


7.2

2014

Other banks
Allied Bank Limited Loan 2
Under LTFF scheme

7.5, 7.8

32 quarterly
July-2010

9,256

10.00% p.a.
payable quarterly

148,104

185,129

Bank Al-Habib Limited Loan 1


Under LTF-EOP scheme

7.4, 7.7

12 half yearly
December-2008

2,315

7.00% p.a.
payable quarterly

4,627

9,256

Bank Al-Habib Limited Loan 2


Under LTFF scheme

7.3, 7.4, 7.8

8 half yearly
December-2013

17,159

12.60% p.a.
payable quarterly

102,947

137,265

Bank Alfalah Limited Loan 1

7.4

9 half yearly
July-2014

1,147

Average six months


KIBOR Ask rate + 1.25%
payable half yearly

10,325

Bank Alfalah Limited Loan 2

7.4

9 half yearly
August-2014

1,472

Average six months


KIBOR Ask rate + 1.25%
payable half yearly

13,252

Annual Report/2014

66

Note

Bank Alfalah Limited Loan 3

7.4

9 half yearly
September-2014

Bank Alfalah Limited Loan 4

7.4

Bank Alfalah Limited - Loan 5


Islamic Banking
Bank Alfalah Limited - Loan 6
Islamic Banking

Installment
amount
Rs. 000s

Mark-up rate
per annum

2014

2013
Rs. 000s

8,172

Average six months


KIBOR Ask rate + 1.25%
payable half yearly

73,547

9 half yearly
October-2014

10,285

Average six months


KIBOR Ask rate + 1.25%
payable half yearly

92,567

7.4

09 half yearly
March-2014

9,439

Average six months


KIBOR Ask rate + 1.25%
payable half yearly

75,511

84,950

7.4

09 half yearly
April-2014

6,457

Average six months


KIBOR Ask rate + 1.25%
payable half yearly

51,662

58,119

Faysal Bank Limited Loan 1


Under LTFF scheme

7.4, 7.8

10 half Yearly
January-2014

6,720

12.70% p.a
payable quarterly

60,480

67,200

Faysal Bank Limited Loan 2


Under LTFF scheme

7.4, 7.8

10 half yearly
January-2014

3,850

12.70% p.a.
payable quarterly

34,650

38,500

Faysal Bank Limited Loan 3


Under LTFF scheme

7.4, 7.8

10 half yearly
April-2014

672

12.70% p.a.
payable quarterly

6,042

6,714

Faysal Bank Limited Loan 4


Under LTFF scheme

7.4, 7.8

10 half yearly
June-2014

241

12.70% p.a.
payable quarterly

2,169

2,410

Faysal Bank Limited Loan 5


Under LTFF scheme

7.4, 7.8

10 half yearly
July-2014

846

12.70% p.a.
payable quarterly

8,460

8,460

Faysal Bank Limited Loan 6


Under LTFF scheme

7.4, 7.8

10 half yearly
September-2014

10,970

12.70% p.a.
payable quarterly

109,700

109,700

Habib Bank Limited Loan 1


a) Under State Bank of Pakistan (SBP)
scheme of Long Term Finance Export Oriented Projects (LTF-EOP)

7.3, 7.7

12 half yearly
June-2010

5,416

7.00% p.a.
payable quarterly

16,245

28,097

12 half yearly
November-2010

4,450

7.00% p.a.
payable quarterly

17,803

26,703

b) Under LTF-EOP scheme


Habib Bank Limited Loan 2
Under LTF-EOP scheme

7.3, 7.7

12 half yearly
December-2010

2,571

7.00% p.a.
payable quarterly

10,284

15,426

Habib Bank Limited Loan 3


Under LTF-EOP scheme

7.3, 7.7

12 half yearly
February-2010

9,510

7.00% p.a.
payable quarterly

28,531

47,551

Habib Bank Limited Loan 4


Under LTF-EOP scheme

7.3, 7.7

12 half yearly
January-2010

778

7.00% p.a.
payable quarterly

2,332

3,888

Habib Bank Limited Loan 5


a) Under LTF-EOP scheme

7.3, 7.7

12 half yearly
January-2010

1,698

7.00% p.a.
payable quarterly

5,091

8,487

139

7.00% p.a.
payable quarterly

414

692

b) Under LTF-EOP scheme

12 half yearly
February-2010

Habib Bank Limited Loan 6


Under State Bank of Pakistan (SBP)
Scheme of Long Term Financing
Facility (LTFF)

7.3, 7.8

16 half yearly
July-2011

11,054

10.00% p.a.
payable quarterly

110,542

132,650

Habib Bank Limited Loan 7


Under LTFF scheme

7.3, 7.8

16 half yearly
August-2011

562

10.00% p.a.
payable quarterly

5,623

6,747

Habib Bank Limited Loan 8


Under LTFF scheme

7.3, 7.8

16 half yearly
October-2011

709

10.00% p.a.
payable quarterly

7,096

8,514

Habib Bank Limited Loan 9


Under LTFF scheme

7.3, 7.8

16 half yearly
March-2012

277

10.00% p.a.
payable quarterly

3,045

3,599

Habib Bank Limited Loan 10


Under LTFF scheme

7.3, 7.8

16 half yearly
August-2012

3,536

10.25% p.a.
payable quarterly

42,470

49,542

HSBC Bank Middle East Limited Loan 1


a) Under LTF-EOP scheme

7.4, 7.7

12 half yearly
October-2010

2,883

7.00% p.a.
payable quarterly

11,534

17,300

12 half yearly
November-2010

1,038

7.00% p.a.
payable quarterly

4,149

6,225

b) Under LTF-EOP scheme

67

Number of
installments and
commencement
month

Particulars

Annual Report/2014

Particulars

Note

Number of
installments and
commencement
month

Installment
amount
Rs. 000s

Mark-up rate
per annum

2014

2013

1,838

7.00% p.a.
payable quarterly

7,353

11,030

Rs. 000s

HSBC Bank Middle East Limited Loan 2


Under LTF-EOP scheme

7.4, 7.7

12 half yearly
December-2010

HSBC Bank Middle East Limited Loan 3


Under LTF-EOP scheme

7.4, 7.7

12 half yearly
February-2010

875

7.00% p.a.
payable quarterly

2,623

4,373

HSBC Bank Middle East Limited Loan 4


Under LTF-EOP scheme

7.4, 7.7

12 half yearly
March-2010

844

7.00% p.a.
payable quarterly

2,532

4,220

Meezan Bank Limited Loan 1


Diminishing Musharaka

7.5

6 half yearly
February-2011

15,266

Average six months


KIBOR Ask rate + 1.00%
payable half yearly

15,266

Meezan Bank Limited Loan 2


Diminishing Musharaka

7.5

6 half yearly
June-2011

1,449

Average six months


KIBOR Ask rate + 1.50%
payable half yearly

1,449

Meezan Bank Limited Loan 3


Diminishing Musharaka

7.5

6 half yearly
July-2011

5,253

Average six months


KIBOR Ask rate + 1.50%
payable half yearly

10,505

National Bank of Pakistan Loan 1

7.5

25 quarterly
September-2009

4,000

Average three months


KIBOR Ask rate + 1.00%
payable quarterly

20,000

36,000

National Bank of Pakistan Loan 2


Under LTFF scheme

7.4, 7.5, 7.8

16 quarterly
September-2011

2,351

10.40% p.a.
payable quarterly

11,755

21,159

National Bank Of Pakistan Loan 3

7.4, 7.5, 7.8

20 quarterly
January-2014

3,190

10.90% p.a.
payable quarterly

57,420

National Bank Of Pakistan Loan 4

7.4, 7.5, 7.8

20 quarterly
May-2014

801

10.90% p.a.
payable quarterly

15,219

National Bank Of Pakistan Loan 5

7.4, 7.5, 7.8

20 quarterly
April-2014

6,009

10.90% p.a.
payable quarterly

114,171

NIB Bank Limited Loan 1


Under LTFF scheme

7.5, 7.8

16 quarterly
June-2010

2,839

9.00% p.a.
payable quarterly

8,510

NIB Bank Limited Loan 2


Under LTFF scheme

7.5, 7.8

16 quarterly
September-2010

1,883

9.00% p.a.
payable quarterly

7,529

NIB Bank Limited Loan 3


Under LTFF scheme

7.5, 7.8

16 quarterly
June-2014

2,827

10.90% p.a.
payable quarterly

42,407

45,234

NIB Bank Limited Loan 4


Under LTFF scheme

7.5, 7.8

16 quarterly
March-2014

829

10.90% p.a.
payable quarterly

11,607

13,265

NIB Bank Limited Loan 5


Under LTFF scheme

7.5, 7.8

16 quarterly
August-2014

498

10.90% p.a.
payable quarterly

7,960

7,960

NIB Bank Limited Loan 6

7.5, 7.8

16 quarterly
March-2014

829

Average three months


KIBOR Ask rate + 1.50%
payable quarterly

11,607

13,265

NIB Bank Limited Loan 7

7.5, 7.8

16 quarterly
June-2014

2,827

Average three months


KIBOR Ask rate + 1.50%
payable quarterly

42,408

45,235

NIB Bank Limited Loan 8


Under LTFF scheme

7.5, 7.8

16 quarterly
September-2014

1,289

10.90% p.a.
payable quarterly

20,640

20,640

NIB Bank Limited Loan 9

7.5, 7.8

16 quarterly
November-2014

301

10.90% p.a.
payable quarterly

4,830

NIB Bank Limited Loan 10

7.5, 7.8

16 quarterly
February-2015

3,220

10.90% p.a.
payable quarterly

51,530

NIB Bank Limited Loan 11

7.5, 7.8

16 quarterly
March-2015

2,016

10.90% p.a.
payable quarterly

32,266

NIB Bank Limited Loan 12

7.5, 7.8

16 quarterly
April-2015

538

10.90% p.a.
payable quarterly

8,610

NIB Bank Limited Loan 13

7.5, 7.8

16 quarterly
May-2015

1,324

10.90% p.a.
payable quarterly

21,190

NIB Bank Limited Loan 14

7.5, 7.8

16 quarterly
June-2015

168

2,695

Annual Report/2014

Average three months


KIBOR Ask rate + 1.50%
payable quarterly

68

Particulars

Note

Number of
installments and
commencement
month

Installment
amount
Rs. 000s

2014

2013

2,037

10.90% p.a.
payable quarterly

32,605

Rs. 000s

NIB Bank Limited Loan 15

7.5, 7.8

16 quarterly
June-2015

NIB Bank Limited Loan 16

7.5, 7.8

16 quarterly
October-2015

803

10.90% p.a.
payable quarterly

12,850

Standard Chartered Bank Loan 1


Under LTFF scheme

7.5, 7.8

8 Half Yearly
October-2012

2,995

11.10% p.a.
payable quarterly

11,980

17,970

Standard Chartered Bank Loan 2


Under LTFF scheme

7.5, 7.8

8 Half Yearly
November-2012

21,886

11.10% p.a.
payable quarterly

87,557

131,329

Average three months


KIBOR Ask rate + 1.00%
payable half yearly

50,000

United Bank Limited Loan 1

7.5

10 half yearly
March-2009

50,000

United Bank Limited Loan 2


Under LTF-EOP scheme

7.5, 7.7

12 half yearly
April-2010

931

7.00% p.a.
payable quarterly

2,793

4,655

United Bank Limited Loan 3


Under LTFF scheme

7.5, 7.8

16 half yearly
November-2010

363

10.00% p.a.
payable quarterly

2,902

3,628

United Bank Limited Loan 4

7.5

United Bank Limited Loan 5


Under LTFF scheme

7.5, 7.8

10 half yearly
December-2012

1,319

10.50% p.a.
payable quarterly

7,915

10,553

United Bank Limited Loan 6


Under LTFF scheme

7.5, 7.8

12 half yearly
December-2011

557

10.50% p.a.
payable quarterly

3,348

4,462

United Bank Limited Loan 7


Under LTFF scheme

7.5, 7.8

12 half yearly
January-2012

128

10.50% p.a.
payable quarterly

900

1,156

United Bank Limited Loan 8


Under LTFF scheme

7.5, 7.8

12 half yearly
February-2012

741

10.50% p.a.
payable quarterly

5,190

6,672

United Bank Limited Loan 9


Under LTFF scheme

7.5, 7.8

12 half yearly
April-2012

3,686

11.20% p.a.
payable quarterly

25,800

33,172

United Bank Limited Loan 10


Under LTFF scheme

7.5, 7.8

19 half yearly
November-2011

7,441

11.20% p.a.
payable quarterly

96,739

111,621

United Bank Limited Loan 11


Under LTFF scheme

7.5, 7.8

19 half yearly
December-2011

5,916

11.20% p.a.
payable quarterly

76,905

88,737

United Bank Limited Loan 12

7.5

12 half yearly
September-2013

United Bank Limited Loan 13

7.5

United Bank Limited Loan 14

7.5

United Bank Limited Loan 15


Under LTFF scheme

7.5, 7.8

12 half yearly
January-2014

259

United Bank Limited Loan 16


Under LTFF scheme

7.5, 7.8

12 half yearly
March-2014

1,525

United Bank Limited Loan 17

7.5

12 half yearly
January-2014

11,913

Samba Bank Limited Loan 1

7.5,7.8

9 half yearly
May-2015

Samba Bank Limited Loan 2

7.5,7.8

9 half yearly
June-2015

6 half yearly
March-2011

25,000

Average six months


KIBOR Ask rate + 1.25%
payable half yearly

25,000

269

Average six months


KIBOR Ask rate + 1.00%
payable half yearly

2,687

3,225

12 half yearly
October-2013

1,235

Average six months


KIBOR Ask rate + 1.00%
payable half yearly

12,353

14,823

12 half yearly
December-2013

5,892

Average six months


KIBOR Ask rate + 1.00%
payable half yearly

58,916

70,700

12.70% p.a.
payable quarterly

2,856

3,115

11.20% p.a.
payable quarterly

16,776

18,302

Average six months


KIBOR Ask rate + 1.00%
payable half yearly

131,037

142,950

17,245

10.90% p.a.
payable quarterly

155,200

4,456

10.90% p.a.
payable quarterly

40,100

Total from other banks

69

Mark-up rate
per annum

2,335,434

2,070,834

Annual Report/2014

7.3

These loans are secured by first pari passu charge over present and future property, plant and equipment of the Company
and equitable mortgage over land and building.

7.4

These loans are secured by charge over specified machinery.

7.5

These loans are secured by way of pari passu charge over the property, plant and equipment of the Company.

7.6

Habib Metropolitan Bank Limited is a related party - Associated Company.

7.7

Grace period of one year in payment of principal outstanding under LTF-EOP facilities was allowed by the banks as per
State Bank of Pakistan SMEFD Circular No. 01 dated January 22, 2009.

7.8

The financing availed under the facility shall be repayable within a maximum period of ten years including maximum
grace period of two years of the date when financing was availed. However, where financing facilities have been provided
for a period of upto five years maximum grace period shall not exceed one year as per State Bank of Pakistan MFD
Circular No. 07 dated December 31, 2007.
2014
2013
Rs. 000s

Re-Stated

DEFERRED T AXATION - NET

Opening
Charged to profit and loss account
Charged to other comprehensive income

316,028
17,406
(513)
332,921

273,969
43,483
(1,424)
316,028

372,060

349,378

(5,185)
(22,094)
(11,860)
(39,139)
332,921

(4,604)
(18,832)
(9,914)
(33,350)
316,028

33,637

23,894

24,654
2,224
26,878
3,910
(24,913)
39,512

11,677
2,867
14,544
10,409
(15,210)
33,637

Deferred tax arises due to:


Taxable temporary differences in respect of
Accelerated tax depreciation allowance
Deductible temporary differences in respect of
Provision for gratuity
Provision for doubtful debts
Provision for slow moving items

ST AFF RETIREMENT BENEFITS


9.1 Reconciliation of the present value of
defined benefit obligation/movement in liability
Opening balance
Charge for the year
Current service cost
Interest cost
Remeasurement loss charged in other comprehensive income
Benefits paid during the year
Closing balance

Annual Report/2014

70

2014

2013

9.2 Significant actuarial assumptions used


Following significant actuarial assumptions were
used for the valuation:
Discount rate used
Expected increase in salary for year end obligation
Average expected remaining working lifetime of
employees

13.25 % p.a
12.25 % p.a

10.5 % p.a
9.5% p.a

8 years

10 years

9.3 General description


The scheme provides retirement benefits to permanent employees who have attained the minimum qualifying
period. Actuarial valuation of the scheme is carried out periodically and latest actuarial valuation was carried out at
30 June 2014. The disclosure is based on information included in that actuarial report.
9.4 Sensitivity analysis
Year end sensitivity analysis ( 100 bps) on Defined Benefit Obligation as presented by actuary in the report.
2014
Rs. 000s
Discount Rate + 100 bps
Discount Rate - 100 bps
Salary increase + 100 bps
Salary increase - 100 bps

36,571
43,028
43,152
36,409

The average duration of the defined benefit obligation is 8 years.


2014
Note
10

Rs. 000s

TRADE AND OTHER PAYABLES


Creditors

- Due to related parties


- Others

Murabaha
Accrued expenses
Advance from customers
Payable to employees' provident fund
Workers' profit participation fund
Workers' welfare fund
Unclaimed dividend
Taxes withheld
Others

10.1

71

2013

10.1
10.2

10.3
10.4

28,801
4,658,717
4,687,518
358,202
806,653
252,809
9,016
84,102
53,634
512
35,351
16,195
6,303,992

73,829
2,828,618
2,902,447
507,569
575,991
101,131
7,712
45,224
40,289
512
16,071
14,672
4,211,618

Murabaha is secured by pari passu hypothecation charge over stores and spares, stock-in-trade, trade debts
and other receivables. Unavailed murabaha facility at the year end was Rs.150 million (2013: Rs. Nil). Murabaha
facilities mature within 12 months. It includes accrued profit of Rs. 8.202 million (2013: Rs. 7.569 million). The
effective rate of profit ranges from 9.15% to 11.28% and is payable on maturity.

Annual Report/2014

10.2

Accrued expenses include infrastructure cess amounting to Rs. 72.48 million (2013: Rs. 34.962 million). The
Company along with other petitioners have challenged the imposition of Infrastructure Cess by the relevant
Excise and Taxation Officer, Karachi. However, in view of the uncertainties in such matters, full provision has
been made in the financial statements.
2014
Note

10.3

2013
Rs. 000s

Workers' profit participation fund


Opening balance
Allocation for the year
Interest for the year

10.3.1

Payments made during the year


Closing balance

45,224
80,340
3,762
129,326
(45,224)
84,102

8,884
45,224
54,108
(8,884)
45,224

10.3.1 The Company retains Workers Profit Participation Fund for its business operations till the date of allocation to
the workers. Interest is payable at prescribed rate under Companies Profit (Workers Participation) Act, 1968 on
funds utilized by the Company till the date of allocation to workers.
10.4

The Company along with other petitioners have challenged the constitutionality of the amendments brought into
Workers Welfare Fund Ordinance, 1971 through Finance Acts of 2006 and 2008. The Honorable Sindh High
Court has given the decision in favor of the Government. The Company has filed an appeal in the Supreme Court
of Pakistan against the above decision. However, in view of the uncertainties in such matters, full provision has
been made in the financial statements.
2014

2013
Rs. 000s

11

ACCRUED MARK-UP/PROFIT
Mark-up on long term financing
Mark-up/profit on short term borrowings

11.1

75,169
101,995
177,164

Accrued markup includes Rs. 1.92 million ( 2013: Rs. 0.60 million) in respect of short term finance and Rs. 16.70
million ( 2013: Rs. 17.34 million) in respect of long term finance due to related party - Habib Metropolitan Bank
Limited (Associated Company).
2014
2013
Note

12

64,145
127,647
191,792

Rs. 000s

SHORT TERM BORROWINGS - SECURED


Short term bank borrowings
Foreign currency
Local currency
Short term running finance

12.1

12.1

5,212,442
2,510,700
7,723,142
106,628
7,829,770

3,209,532
4,799,945
8,009,477
280,939
8,290,416

Short term borrowing includes Istisna Rs. 580 million (2013: Rs. 1,125 million) in local currency and Rs. 1,959
million (2013: Rs. 218 million) in foreign currency.

Annual Report/2014

72

13

12.2

Short term borrowings are secured by pari passu hypothecation charge over stores and spares, stock-in-trade,
trade debts, other receivables and pledge over cotton. Unavailed facility at the year end was Rs. 6,162 million
(2013: Rs.3,560 million). The facility for short term finance matures within twelve months. Short term borrowings
include Rs. 614 million (2013: Rs. 592 million) from related party - Habib Metropolitan Bank Limited (Associated
Company).

12.3

Foreign currency mark-up/profit rates range from 0.84% to 3.75% (2013: 0.80% to 3.75%) per annum. Local
currency mark-up/profit rates range from 8.95% to 13.38% (2013: 8.95% to 14.98%) per annum.

CONTINGENCIES AND COMMITMENTS


13.1

The Company owns and possesses a plot of land measuring 44 acres in Deh Khanto which is appearing in the
books at a cost of Rs. 64 million. The Company holds title deeds of the land which are duly registered in its name.
Ownership of the land has been challenged in the Sindh High Court by some claimants who claim to be the
owners as this land was previously sold to them and subsequently resold to the Company. The claim of the
alleged owners is fictitious. The Company is confident that its title to the land is secure and accordingly no
provision in this behalf has been made in these financial statements.

13.2

The Company has filed a suit in the Honorable Sindh High Court for recovery of Rs. 33.409 million (2013:
Rs. 33.409 million) against sale of property included in other receivables note no. 22. The Company's management
and its legal counsel are of the opinion that the case will be decided in the Company's favor and as such no
provision has been made there against.

13.3

The Company has filed a Petition in the Honorable Sindh High Court against order passed by the Board of
Trustees, Employees' Old-Age Benefits Institution (EOBI) for upholding the unjustified additional demand of
payment raised by EOBI for accounting years 2000-01 and 2001-02 amounting to Rs.50.827 million (2013:
Rs. 50.827 million). This demand had been raised after lapse of more than two years although the records and
books of the Company were verified by the EOBI to their entire satisfaction and finalization of all matters by EOBI.
The Honorable Sindh High Court has already restrained EOBI from taking any action or proceedings against the
Company. No provision has been made there against in these financial statements as the Company is confident
of the favorable outcome of the Petition.

13.4

The Company has filed a Constitution Petition in the Honorable Sindh High Court against the City District
Government of Karachi for striking down the unjustified demand of payment of Ground Rent of Rs.10 million and
against which part payment of Rs. 2.57 million has been made. The Honorable Sindh High Court has already
restrained the City District Government of Karachi from taking any coercive action against the Company. No
provision has been made there against in these financial statements as the Company is confident of the favorable
outcome of the Petition. Also refer note no. 21.1.

13.5

The Government of Pakistan increased the Gas Infrastructure Development Cess (GIDC) from Rs. 13 per MMBTU
to Rs.100 per MMBTU with effect from July 2012. This was subsequently reduced by the Government to Rs.50
per MMBTU from September 2012 and then again increased to Rs. 100 per MMBTU and it has been further
increased to Rs. 150 per MMBTU with effect from July 2014. The Company along with several other companies
has filed a suit in the Honorable Sindh High Court challenging the increase in GIDC and the Honorable Sindh
High Court has issued stay against recovery of the enhanced GIDC and hence the Company has not paid the
enhanced amount of GIDC. Further as the Company is confident that the case will be decided in favour of the
Appellants hence no provision in respect of the enhanced GIDC is made in these Financial Statements which
amounts to Rs. 344.210 million (2013: Rs. 145.972 million) as on the balance sheet date.
Similar petitions filed in the Peshawar and Islamabad High Courts have been decided in favor of the Appellants.
In the case of Islamabad High Court the matter is now with its division bench and decision of the Peshawar High
Court has been challenged by the Government in the Supreme Court of Pakistan. Subsequent to year end a
Three Member Bench of Honorable Supreme Court of Pakistan has declared the GIDC illegal and unconstitutional
vide its judgment dated August 22, 2014 and has accordingly suspended collection of GIDC and maintained the
order of the refund of GIDC so far collected.

73

Annual Report/2014

Considering these decisions and no subsequent actions on part of the Government against the decision of
Honorable Supreme Court, the Company is confident that amount of the enhanced GIDC as stated above will
no more be payable and that the amount already paid at the original rate of Rs. 13 per MMBTU aggregating to
Rs. 105 million up to June 30, 2014 will be recovered so it has been reversed and reported in these financial
statements as GIDC refundable as reflected in note no. 22.1. Out of this total amount paid, the amount of
Rs. 62.958 million paid and charged in preceding years is reported in other income as stated in note no. 30
whereas the amount of Rs. 42.293 million represents the amount paid in current year in respect of GIDC which
is not charged in current year in these financial statements.
13.6

The Company has filed a suit in the Honorable Sindh High Court for recovery of Rs. 17.851 million against a
customer for the sale of fabric included in trade debts note no. 20. However, in view of the uncertainties in such
matters, full provision has been made in the financial statements.

13.7 Guarantees
(a) Rs. 636 million (2013: Rs. 332 million) against guarantees issued by banks which are secured by pari
passu hypothecation charge over stores and spares, stock-in-trade, trade debts and other receivables. These
guarantees includes guarantees issued by related party - Habib Metropolitan Bank Limited amounting to
Rs. 567.241 million (2013: Rs. 268.622 million).
(b) Post dated cheques Rs. 535 million (June - 2013: Rs. 182 million) are issued to custom authorities in respect
of duties on imported items availed on the basis of consumption and export plans.
(c) Bills discounted Rs. 2,900 million (June - 2013: Rs. 2,216 million).
(d) Corporate guarantee of Rs. 109.398 million (June - 2013: Rs. 102.26 million) has been issued to bank in
favor of indirect subsidiary company - GTM (Europe) Limited-UK.
13.8 Commitments
(a) The Company is committed for capital expenditure as at June 30, 2014 of Rs. 469 million (2013: Rs. 410
million).
(b) The Company is committed for non capital expenditure items under letters of credits as at June 30, 2014
of Rs. 2,221 million (2013: Rs. 579 million).
(c) The Company is committed to minimum rental payments for each of the following period as follows:
2014
Note
Not more than one year
More than one year but not more than five years
More than five years

14

2013
Rs. 000s

323,120
1,242,552
730,377
2,296,049

262,090
994,498
600,930
1,857,518

7,712,257
497,296
8,209,553

6,906,799
225,313
7,132,112

PROPERTY , PLANT AND EQUIPMENT


Operating assets
Capital work in progress (CWIP)

Annual Report/2014

14.1
14.2

74

14.1 Operating Assets


Note Leasehold Buildings and
land
structures on
leasehold land

Plant and
machinery

Furniture
Office
and
equipment
fixtures
Rs. 000s

Vehicles

Total

239,136
181,993
(18,108)
(66,316)

6,906,799
329,017
1,365,561
(35,721)
(4,421)
(848,978)

Year ended June 30, 2014


Net carrying value basis
Opening net book value (NBV)
Direct additions (at Cost)
Transfer from CWIP
Disposal at NBV
14.1.2
Scrapped at NBV
Depreciation charge
14.1.1

234,107
(6,543)
-

992,286
23,082
106,514
(121,338)

5,242,964
88,330
1,242,091
(9,156)
(622,399)

Closing net book value

227,564

1,000,544

5,941,830

Cost
Accumulated depreciation

227,564
-

2,245,825
(1,245,281)

11,849,370
(5,907,540)

Net book value

227,564

1,000,544

5,941,830

Opening net book value (NBV)


Direct additions (at cost)
Transfer from CWIP
Disposal at NBV
14.1.2
Scrapped at NBV
Depreciation charge
14.1.1

234,107
-

1,017,567
23,287
72,501
(121,069)

4,918,427
142,949
779,316
(51,279)
(546,449)

Closing net book value

234,107

992,286

5,242,964

Cost
Accumulated depreciation

234,107
-

2,116,229
(1,123,943)

10,568,505
(5,325,541)

Net book value

234,107

992,286

5,242,964

10

10

57,179
919
2,558
(2,765)
(6,148)
51,743

141,127
34,693
14,398
(1,914)
(1,656)
(32,777)
153,871

336,705

7,712,257

Gross carrying value basis


as at June 30, 2014
96,644 403,565
601,491
15,424,459
(44,901) (249,694) (264,786) (7,712,202)
51,743

153,871

336,705

7,712,257

Year ended June 30, 2013


Net carrying value basis
63,180
3,188
559
(455)
(2,451)
(6,842)
57,179

155,148
21,793
11,462
(770)
(3,038)
(43,468)
141,127

218,104
77,720
(6,808)
(49,880)
239,136

6,606,533
268,937
863,838
(59,312)
(5,489)
(767,708)
6,906,799

Gross carrying value basis


as at June 30, 2013

Depreciation rate % per annum

100,991 372,316
476,930
13,869,078
(43,812) (231,189) (237,794) (6,962,279)
57,179
10 to 12

141,127

239,136

15 to 30

6,906,799
20

2014
Note
14.1.1

Depreciation charge for the year has been allocated as follows:


Cost of goods manufactured
Distribution cost
Administrative expenses

75

2013
Rs. 000s

26.1
27
28

692,899
71,629
84,450
848,978

623,544
65,990
78,174
767,708

Annual Report/2014

14.1.2 Details of operating assets sold

Particulars of assets

Cost

Written
Mode
Sale
down
of
value proceeds disposal

Particulars of buyers

Rs.000s
Land
Plot No. 43 B, Block-6,
P.E.C.H.S

6,543

6,543

72,500

Negotiation Mr . Qamar Usman


Resident No. 431/3, Sirajuddulah Road,
Bahadurabad, Karachi.

Ring Spinning

2,535

472

2,720

Negotiation Anwar Textile Mills Limited.


8th Floor, Sheikh Sultan Trust - Building,
Beaumor, Karachi.

Ring Spinning

1,229

235

765

Ring Spinning

3,919

756

2,308

Ring Spinning

7,991

1,533

Rotary Screen
Printing Unit

5,949

312

2,024

Negotiation Chaudhary Traders


Chak Number 173 G-B,
Tehsil Samundri District, Faisalabad.

Waukesha Generator

5,151

316

3,760

Negotiation Orient Energy Systems (Private) Limited.


Plot 16, Sector 24, Korangi Industrial Area,
Karachi.

Waukesha Gas
Generator

19,776

5,177

8,940

Negotiation Orient Energy Systems (Private) Limited.


Plot 16, Sector 24, Korangi Industrial Area,
Karachi.

Blanket Rubber

755

328

2,131

Negotiation Zulekha W elcome Textiles


F-468 & B-19 Site, Karachi.

2,113

375

211

601

177

234

Company
Policy

1,311

447

1,006

Negotiation Mr. Adnan Ahmed Bhatti


House # E-148, Defence View Phase II,
Karachi.

Plant and machinery

5,400

Negotiation International Textile Machinery Enterprise


Suit No.1001, 10th Floor,
Business Plaza, Mumtaz Hassan Road,
Off. I.I. Chundrigar Road, Karachi.
Negotiation MKB Spinning Mills (Pvt) Limited
446-C, Batala Colony, Faisalabad.
Negotiation Sally Textile Mills Ltd
4-F, Gulberg-Ii, Lahore Distt, Lahore.

Office equipment
Air Condition

Negotiation Zarina Air Conditioning Services


Saddar, Karachi.

Vehicles
Suzuki
Alto - ARG-047
Toyota
Corolla - ASH-278

Annual Report/2014

Mr. Abdul Rasheed - Employee


House # L-42, Sector 5-M,
Khayam Town, North Karachi, Karachi.

76

Particulars of assets

Cost

Written
Mode
Sale
down
of
value proceeds disposal

Particulars of buyers

Rs.000s
Suzuki
Alto - APH-643

516

111

490

Negotiation Mr. Adnan Hassan Khan


House # A-908/12, F.B. Area,
Gulberg, Ancholi, Karachi.

Suzuki
Cultus - ARM-403

837

224

633

Negotiation Mr. Adnan Hassan Khan


House # A-908/12, F.B. Area,
Gulberg, Ancholi, Karachi.

Suzuki
Cultus - ARC-018

709

205

280

Company
policy

Suzuki
Cultus - AQG-107

640

143

256

Negotiation Mr. Faizan Sidiq


House # B-631, Zaman Town, Korangi 4,
Sector 35/A, Karachi.

Suzuki
Alto - ARJ-057

636

174

255

Company
policy

Suzuki
Alto - AHN-782

507

67

1,498

626

945

Company
policy

900

126

566

Negotiation Mr. Gul Dad


House No. Hk-579, KPT Building,
New Qadri, Karachi.

1,534

759

785

Negotiation Mr. Gul Dad


House No. Hk-579, KPT Building,
New Qadri, Karachi.

Suzuki
Cultus - ASX-284

892

304

736

Negotiation Mr. Gul Dad


House No. Hk-579, KPT Building,
New Qadri, Karachi.

Suzuki
Cultus - ARP-695

836

233

666

Negotiation Mr. Gul Dad


House No. Hk-579, KPT Building,
New Qadri, Karachi.

Suzuki
Cultus - ASW-381

824

281

716

Negotiation Mr. Gul Dad


House No. Hk-579, KPT Building,
New Qadri, Karachi.

Suzuki
Cultus - ARB-417

710

225

611

Negotiation Mr. Gul Dad


House No. Hk-579, KPT Building,
New Qadri, Karachi.

Toyota
Corolla - AJF-904

1,002

140

825

Negotiation Mr. Gul Dad


House No. Hk-579, KPT Building,
New Qadri, Karachi.

Toyota
Corolla - AVA-057
Honda
City - AJT-948
Shehzore - CT-3533

77

200

Mr. Ashraf Nawaz - Employee


House # 8-14/3, F-1, Mohalla Tareen Road,
Quetta.

Miss. Fouzia Anwar - Employee


Flat # 109, Sea Breeze Heights,
Block # 2, Clifton, Karachi.

Negotiation Mrs. Ghazala Jaseem


House # A-33, Mohalla Anwar Ibrahim,
Malir City, Karachi.
Mr. Ghulam Rasool - Employee
Flat # B-2/36, Kazimabad, Model Colony,
Block-A, Karachi.

Annual Report/2014

Particulars of assets

Cost

Written
down
value

Mode
Sale
of
proceeds disposal

Particulars of buyers

Rs.000s
Toyota
Corolla - ARY-926

1,348

368

Suzuki
Alto - AKW-804

512

77

Suzuki
Alto - APJ-648

516

131

Suzuki
Bolan - CN-5768

396

55

Suzuki
Bolan - CS-2237

408

103

403

Negotiation Mr . Jawed Iqbal


House # 2874, Usman Ghani Colony,
North Karachi, Dakhana Al-Hyderi, Block-R,
Karachi.

Suzuki
Cultus - AGR-367

590

65

428

Negotiation Mr . Jawed Iqbal


House # 2874, Usman Ghani Colony,
North Karachi, Dakhana Al-Hyderi, Block-R,
Karachi.

Honda
City - BBA-880

1,876

1,720

1,800

Company
policy

Mr . Khurram Mushtaq - Employee


House # A-134, Block 7,
Mohalla Gulistan-e-Johar, Karachi.

Honda
City - ARE-485

1,070

316

429

Company
policy

Mr . Mobeen Aslam - Employee


House # A-260, Block J,
North Nazimabad, Karachi.

Honda
City - ATG-218

1,269

468

850

Negotiation Mr . Mobeen Aslam - Employee


House # A-260, Block J,
North Nazimabad, Karachi.

Suzuki
Swift - AUF-892

1,092

456

750

Negotiation Mr . Mobeen Aslam - Employee


House # A-260, Block J,
North Nazimabad, Karachi.

Honda
City - ASA-718

1,467

433

591

Negotiation Mr. Muhammad Arif


House No. B-30, 11-C/1, North Karachi, Karachi.

Hyundai
Grace - CN-5666

1,194

129

620

Negotiation Mr. Muhammad Arif


House No. B-30, 11-C/1, North Karachi, Karachi.

Suzuki
Alto - AHZ-348

504

69

413

Negotiation Mr. Muhammad Arif


House No. B-30, 11-C/1, North Karachi, Karachi.

Suzuki
Cultus - AFT-094

590

65

433

Negotiation Mr. Muhammad Arif


House No. B-30, 11-C/1, North Karachi, Karachi.

Annual Report/2014

522

419

212

323

Negotiation Mr . Gul Dad


House No. Hk-579, KPT Building,
New Qadri, Karachi.
Negotiation Mr . Imran Ahmed
House # 219, Sector 35-B,
Korangi # 4, Karachi.
Company
policy

Mr . Javed Naeem - Employee


House#426, Street # 7,
Sector 37-D, Landhi # 1 Karachi

Negotiation Mr . Jawed Iqbal


House # 2874, Usman Ghani Colony,
North Karachi, Dakhana Al-Hyderi, Block-R,
Karachi.

78

Particulars of assets

Cost

Written
Mode
Sale
down
of
value proceeds disposal

Particulars of buyers

Rs.000s

79

Suzuki
Cultus - APN-169

626

142

573

Negotiation Mr. Muhammad Arif


House No. B-30, 11-C/1, North Karachi, Karachi.

Suzuki
Cultus - AQY-751

682

155

618

Negotiation Mr. Muhammad Arif


House No. B-30, 11-C/1, North Karachi, Karachi.

Suzuki
Mehran - AMV-610

402

82

367

Negotiation Mr. Muhammad Arif


House No. B-30, 11-C/1, North Karachi, Karachi.

Toyota
Corolla - ASP-494

1,428

487

1,189

Negotiation Mr. Muhammad Arif


House No. B-30, 11-C/1, North Karachi, Karachi.

Toyota
Corolla - ASN-214

1,313

439

1,091

Negotiation Mr. Muhammad Arif


House No. B-30, 11-C/1, North Karachi, Karachi.

Honda
City - ARE-227

1,070

316

892

Negotiation Mr. Muhammad Faizan Javed


House # 1095, Block-4,
Shah Faisal Colony, Karachi.

Suzuki
Cultus - APL-026

621

146

582

Negotiation Mr. Muhammad Faizan Javed


House # 1095, Block-4,
Shah Faisal Colony, Karachi.

Suzuki
Cultus - ARL-746

775

229

612

Negotiation Mr. Muhammad Faizan Javed


House # 1095, Block-4,
Shah Faisal Colony, Karachi.

Suzuki
Alto - AMJ-446

513

90

205

Company
policy

Suzuki
Pickup - CR-4172

351

61

357

Negotiation Mr. Muhammad Sadiq


House No. G-935,
Adamjee Road, Karachi.

Toyota
Corolla - ATG-946

1,419

504

795

Company
policy

Suzuki
Cultus - ARP-693

831

245

333

Negotiation Mr . Mujeeb-ur-Rehman
Block-A, Area 2-9, S.I.T.E. Karachi

Honda
City - AEM-408

785

64

658

Negotiation Mr . Nadeem-ur-Rehman
House # E-14, KDA Center,
View Apartment, Sector 15-A/1,
Buffer Zone, Karachi.

Suzuki
Bolan - CR-8367

469

89

404

Negotiation Mr . Nadeem-ur-Rehman
House # E-14, KDA Center,
View Apartment, Sector 15-A/1,
Buffer Zone, Karachi.

Mr. Muhammad Javed - Employee


Flat # 101, First Floor,
Mustafa Centre, Karachi.

Mr. Muhammad Yousuf Hussain - Employee


House # C6, Street AB Arcade, Block-A,
Fatima Jinnah Colony, Karachi.

Annual Report/2014

Particulars of assets

Cost

Written
Mode
Sale
down
of
value proceeds disposal

Particulars of buyers

Rs.000s
Suzuki
Alto - AQA-149

516

124

Suzuki
Alto - ARK-189

512

60

Honda
City - ARB-481

1,058

301

424

Negotiation Mrs. Saira Nadeem


Bilal Garden, Plot # 66/3, Flat # B-902,
Karachi.

Honda
City - ARH-033

1,070

339

431

Company
policy

626

148

495

Negotiation Mr . Shaikh Abdul Waheed


House # A-419, Mohalla Harmeen Tower,
Gulistan-e-Johar, Block-19, Karachi.

1,975

561

1,1 13

Negotiation Mr. Sultan Hassan Khan


House No. A-908/12, F.B. Area, Karachi.

Suzuki
Alto - ARJ-247

636

174

493

Negotiation Mr . Sultan Hassan Khan


House No. A-908/12, F.B. Area, Karachi.

Suzuki
Alto - ARM-576

681

197

273

Company
policy

Suzuki
Mehran - APD-028

402

97

Suzuki
Alto - APH-742

516

113

491

Negotiation Mr. Syed Muhammad Taufiq


House # B-150, Gulshan-E-Iqbal,
Block-6, Karachi.

Honda
City - APN-894

919

244

351

Company
policy

Mr . Syed Nusrat Abbas - Employee


House # B-405, B Area,
Malir Colony, Karachi.

Suzuki
Mehran - APS-973

406

99

Company
policy

Mr . Syed Shujaat Hussain - Employee


House # B-22, Sector 35/A, Zaman Town,
Korangi-4, Karachi.

1,303

445

512

89

Suzuki
Cultus - APM-715
Honda
Civic - ARL-853

Honda
City - ASW-158
Suzuki
Alto - ANT-058

Annual Report/2014

208

256

158

163

900

462

Company
policy

Mr . Rehan Ahmed - Employee


House # 4/884, Shah Faisal Colony,
Karachi.

Company
policy

Mr . Riaz Abdul Razzak - Employee


House # 417/2, Area Muzzamil Arcade
Azizabad, Karachi.

Mr . Saleemuddin - Employee
House # R-124, Tariq Bin Ziyad Society
Jinnah Avenue, Malir Halt, Karachi.

Mr . Syed Adnan Aslam - Employee


House # 309, Mohallah J-1 Area,
Korangi-5, Karachi.

Negotiation Mr . Syed Junaid Aziz Bukhari


House # C1-16/1, Second Floor,
Ropali Residency, Block 19, Karachi.

Negotiation Mr . Umer Farooq Farooqi


House # A-344, Sector 11-A,
North Karachi, Karachi.
Negotiation Mr . Wali Ahmed Khan
House # B-88, Block-C,
North Nazimabad, Karachi.

80

Particulars of assets

Cost

Written
Mode
Sale
down
of
value proceeds disposal

Particulars of buyers

Rs.000s
Suzuki
Alto - AQH-645

516

1 13

489

Negotiation Mr. Wali Ahmed Khan


House # B-88, Block-C,
North Nazimabad, Karachi.

Suzuki
Alto - AQE-843

521

114

485

Negotiation Mr. Wali Ahmed Khan


House # B-88, Block-C,
North Nazimabad, Karachi.

Suzuki
Alto - AND-591

504

90

458

Negotiation Mr . Waseem Khan


Flat# 09, Rufi Corner, Block-3,D/1,
Gulshan-e-Iqbal, Karachi.

2,487

2,238

2,414

Insurance
Claim

M/s. EFU General Insurance Ltd.

675

497

612

Insurance
Claim

M/s. EFU General Insurance Ltd.

2,250
3,529
7,494

26
320
1,539

1,158
2,388
801

Negotiation Various
Negotiation Various
Negotiation Various

Honda
Civic - BAQ-548
Suzuki
Mehran - AYL-862
Written down value
below Rs. 50,000
each
- Plant & machinery
- Vehicle
- Others

14.2

2014

123,139

35,721 141,855

2013

161,615

59,312

76,392

C apital work-in-progress
2014
Civil
work

Other
assets

T otal

175,122

45,556

4,635

225,313

1,408,968

214,845

13,731

1,637,544

(1,242,091) (106,514)

(16,956)

Machinery and
store items
held for
capitalisation

Cost as at start
Capital expenditure incurred
during the year
Transferred to property,
plant and equipment
Transferred to intangible
assets
Cost as at close

81

2013

341,999

153,887

1,410

Machinery and
store items
held for
capitalisation
Rs. 000s

(1,365,561)
497,296

Civil
work

Other
assets

Total

199,596

19,951

2,840

222,387

754,842

98,106

17,331

870,279

(779,316)

(72,501)

(12,021)

(863,838)

(3,515)

(3,515)

175,122

45,556

4,635

225,313

Annual Report/2014

2014
Note
15

2013
Rs. 000s

INT ANGIBLE ASSETS


Computer Software
Net carrying value basis
Opening net book value
Additions (at cost)
Transfer from capital work in process
Amortisation charge
Closing net book value

15.1

23,130
8,488
(11,253)
20,365

26,535
5,289
3,515
(12,209)
23,130

165,491
(145,126)
20,365

157,003
(133,873)
23,130

Gross carrying value as at June 30


Cost
Accumulated amortisation
Net book value
15.1

The cost is being amortized using straight line method over a period of five years and the amortization charge has been
allocated as follows:

2014

Note
Distribution cost
Administrative expenses

15.2
16

27
28

2013

Rs. 000s
563
10,690
11,253

1,384
10,825
12,209

58,450

58,450

Remaining useful life of these assets range from one to four years.

LONG TERM INVESTMENT


Gul Ahmed International Limited - FZC UAE

16.1

16.1

Gul Ahmed International Limited - FZC UAE is a wholly owned unquoted subsidiary (the subsidiary) of the Company
having 10,000 (2013:10,000) ordinary shares of USD 100 each, valued at cost. The subsidiary is incorporated in United
Arab Emirates (UAE). The Investment's breakup value of shares as per the audited accounts for the year ended June
30, 2014 is Rs. 261 million (2013: Rs. 263 million).

2014
Note
17

2013
Rs. 000s

LONG TERM LOANS AND ADVANCES


Considered good - Secured
Due from executives (other than CEO and Directors)
Due from non-executive employees

17.2

15,680
1,594
17,274

2,075
1,340
3,415

(5,119)
(254)
(5,373)
11,901

(1,163)
(191)
(1,354)
2,061

Current portion being receivable within twelve months


following the balance sheet date
Due from executives
Due from non-executive employees
21

Annual Report/2014

82

17.1

Loans and advances have been given for the purchase of cars, motorcycles and household equipments and
housing assistance in accordance with the terms of employment and are repayable in monthly installments.
These loans are secured against cars, outstanding balance of provident fund, retirement benefits and/or
guarantees of two employees.
Included in these are loans of Rs. 9.730 million (2013: Rs. 0.367 million) to executives and Rs. 0.535 million
(2013: Rs. 0.595 million) to non-executives which carry no interest. The balance amount carries interest/mark-up
ranging from 9% to 14%.
2014
2013
Rs. 000s

17.2 Reconciliation of carrying amount of loans to executives


Opening balance
Disbursement during the year
Recovered during the year
Closing balance

2,075
19,067
(5,462)
15,680

5,183
(3,108)
2,075

The maximum aggregate amount due from executives at the end of any month during the year was Rs. 16.554
million (2013: Rs. 4.852 million).
2014
2013
Note
18

Rs. 000s

ST ORES, SPARE PARTS AND LOOSE TOOLS


Stores
Spare parts
Loose tools

Provision for slow moving/obsolete items

18.1

575,990
365,951
3,983
945,924

432,227
360,497
3,153
795,877

(90,394)
855,530

(72,442)
723,435

72,442
17,952
90,394

57,431
15,011
72,442

2,926,027
329,995
8,658,343
11,914,365

2,457,304
265,327
6,832,593
9,555,224

18.1 Movement in provision for slow moving/obsolete items


Opening balance
Charge for the year
Closing balance
19

STOCK-IN-TRADE
Raw materials
Work-in-process
Finished goods

83

19.1

19.1

Finished goods include stock of waste valuing Rs. 30 million (2013: Rs. 77 million) determined at net realizable
value.

19.2

Raw materials amounting to Rs. Nil (2013: Rs. Nil ) has been pledged with the banks as at balance sheet date.

Annual Report/2014

2014
Note
20

2013
Rs. 000s

TRADE DEBTS
Export debtors - secured
Cosidered good

20.1

Local debtors - unsecured


- Considered good
- Considered doubtful

Provision for doubtful trade debts

20.3

560,449

622,544

806,245
168,385
974,630
1,535,079
(168,385)
1,366,694

1,950,724
137,610
2,088,334
2,710,878
(137,610)
2,573,268

3,813
36,745
40,558

1,587
33,560
35,147

20.1 Includes amounts due from related parties as under:


Export debtors - secured
Gul Ahmed International Ltd. (FZC)-UAE - wholly owned subsidiary
GTM (Europe) Limited - indirect subsidiary
GTM USA Corporation - indirect subsidiary

20.2

The maximum aggregate month end balance due from related parties during the year was Rs. 99 million (2013:
Rs. 255 million).

20.2.1 Aging analysis of the amounts due from related parties is as follows:
2014
Upto 1
month

1-6
months

2013
More than
6 months

Upto 1
month

Total

1-6
months

More than
6 months

Total

Rs. 000s
Gul Ahmed International Ltd. (FZC)-UAE
GTM (Europe) Limited
GTM USA Corporation

3,813
30,814
34,627

5,931
5,931

3,813

1,587

1,587

36,745
40,558

1,587

33,560
33,560

33,560
35,147

2014

2013
Rs. 000s

20.3 Movement in provision for doubtful trade debts


Opening balance
Charge for the year
Closing balance

Annual Report/2014

137,610
30,775
168,385

107,785
29,825
137,610

84

2014
Note
21

2013
Rs. 000s

LOANS AND ADVANCES


Considered Good
Current portion being receivable within twelve months
following the balance sheet date
- Executives
- Other employees
Advances to suppliers
Letters of credit

17
21.1 & 21.2

5,119
254
5,373
390,580
395,953

1,163
191
1,354
272,212
72,863
346,429

21.1

This includes Rs. 2.57 million (2013: Rs. 2.57 million) paid to Nazir Sindh High Court, Karachi in compliance with the
Order of the Honorable Sindh High Court in respect of ground rent suit as mentioned in note no. 13.4.

21.2

Advances to suppliers include Rs. 4.76 million (2013: Rs. 1.53 million) with related parties - Rs. 3.44 million (2013:
Rs. 1.53 million) with Arwen Tech (Private) Limited and Rs. 1.32 million (2013: Nil) with Win Star (Private) Limited.

2014
Note
22

2013
Rs. 000s

OTHER RECEIVABLES
Duty drawback
Duty drawback local taxes and levies
Mark-up rate subsidy receivable
Receivable against sale of property
Others

22.1

13.2
22.1

152,716
7,777
6,918
33,409
141,480
342,300

104,158
6,918
33,409
29,229
173,714

This includes Rs. 105.251 million (2013: Nil) in repsect of GIDC paid as stated in note no. 13.5.

2014
Note
23

483,405
170,076
653,481

168,735
60,719
229,454

6,837

8,246

105,589
2,528
108,117
114,954

84,638
9,037
93,675
101,921

CASH AND BANK BALANCES


Cash in hand
Balances with banks in current accounts
- Local currency
- Foreign currency
24.1

24.1

85

Rs. 000s

TAX REFUNDS DUE FROM GOVERNMENT


Sales tax
Income tax

24

2013

Bank balances include Rs. 3.504 million (2013: Rs. 35.341 million) kept with a related party - Habib Metropolitan Bank
(Associated Company).

Annual Report/2014

2014
Note
25

2013
Rs. 000s

SALES
Local
Export
Direct export
Indirect export

25.1

Duty drawback

Brokerage and commission

25.1

11,422,345

13,182,713

20,124,985
1,359,807
21,484,792
172,963
33,080,100

16,184,262
794,987
16,979,249
143,011
30,304,973

(67,376)
33,012,724

(62,254)
30,242,719

Sales are exclusive of sales tax amounting to Rs. 417.216 million (2013: Rs. 280.518 million).
2014
Note

26

2013
Rs. 000s

Re-stated

COST OF SALES
Opening stock of finished goods
Cost of goods manufactured
Purchases and processing charges

26.1

Closing stock of finished goods

6,832,593
22,976,999
5,885,426
35,695,018
(8,658,343)
27,036,675

4,945,923
21,764,855
5,613,742
32,324,520
(6,832,593)
25,491,927

11,761,667
3,721,970
3,925,307
2,061,862
111,106
806,507
692,899
113,984
(153,635)
23,041,667

12,897,675
2,976,436
2,865,885
1,739,168
97,779
590,417
623,544
104,584
(98,459)
21,797,029

265,327
(329,995)
(64,668)
22,976,999

233,153
(265,327)
(32,174)
21,764,855

26.1 Cost of goods manufactured


Raw materials consumed
Stores, spare parts and loose tools consumed
Staff cost
Fuel, power and water
Insurance
Repairs and maintenance - net of insurance claim
Depreciation
Other manufacturing expenses
Cost of samples shown under distribution cost

Work-in-process
Opening
Closing

Annual Report/2014

26.2
28.1

14.1.1

86

2014
Note
26.2

2,236,375
13,118,604
(2,457,304)
12,897,675

253,178
539,273
21,569
615,281
17,377
153,635
348,774
71,629
563
51,475
49,906
2,122,660

201,961
365,181
13,019
382,703
13,453
98,459
280,425
65,990
1,384
41,326
45,985
1,509,886

408,589
55,155
51,150
133,590
99,894
152,118
36,088
36,270
72,638
41,496
84,450
10,690
1,765
4,619
16,972
30,775
17,952
59,709
1,313,920

356,730
36,617
35,643
103,857
75,634
130,689
29,868
26,330
57,376
39,616
78,174
10,825
1,597
2,139
14,672
29,825
15,011
42,317
1,086,920

ADMINISTRATIVE EXPENSES
Staff cost
Rents, rates and taxes
Repairs and maintenance
Vehicle up keep and maintenance
Utilities
Conveyance and traveling
Printing and stationery
I.T. expenses
Postage and telecommunication
Legal and consultancy fees
Depreciation
Amortisation
Auditors' remuneration
Donations
Insurance
Provision for doubtful trade debts
Provision for slow moving/obsolete items
Other expenses

87

2,457,304
12,230,390
(2,926,027)
11,761,667

DISTRIBUTION COST
Freight and shipment expenses
Staff Cost
28.1
Insurance
Advertisement and publicity
Participation in exhibition
Cost of samples transferred from cost of goods manufactured
Rents, rates and taxes
Depreciation
14.1.1
Amortisation
15.1
Export development surcharge
Other expenses

28

Rs. 000s

Raw materials consumed


Opening stock
Purchases during the year
Closing stock

27

2013

28.1

14.1.1
15.1
28.2
28.3

Annual Report/2014

28.1

Staff cost
Cost of sales
2014
2013
Re-stated

- Salaries, wages
& benefits

3,799,395

2,784,996

26,878
41,451
68,329

Distribution cost
2014
2013

Administrative expenses
2014
2013

Total
2014

2013

Rs. 000s
525,208

354,431

389,058

339,726

4,713,661

3,479,153

14,544

26,878

14,544

32,132
46,676

13,066
13,066

10,035
10,035

17,092
17,092

14,768
14,768

71,609
98,487

56,935
71,479

57,583
34,213
3,925,307 2,865,885

999
539,273

715
365,181

2,439
408,589

2,236
356,730

61,021
4,873,169

37,164
3,587,796

Retirement benefits
- Gratuity
- Contribution to
provident fund

- Staff compensated
absences

2014

2013
Rs. 000s

28.2

Auditors' remuneration
Audit fee
Review fee of half yearly accounts
Fee for consolidation of holding and subsidiaries
Review fee of statement of compliance with
code of corporate governance
Other certification fees
Out of pocket expenses

28.3

1,150
100
150

1,150
30
150

50
115
200
1,765

50
32
185
1,597

Donation of Rs. 2.095 million (2013: Rs. 1.920 million) paid to Fellowship Fund for Pakistan. Mr. Mohomed Bashir, Chairman
of the Company was the Trustee of the Fund up to February, 2014.
2014
2013

Note
29

Workers' profit participation fund


Workers' welfare fund
Loss on sale of property, plant and equipment
Property, plant and equipment scrapped

30

Rs. 000s

OTHER OPERA TING EXPENSES


80,340
30,530
906
4,421
116,197

45,224
18,124
3,519
5,489
72,356

1,635
52,533
54,168

1,151
9,605
10,756

107,040
11,389
62,958
181,387

20,599
7,203
27,802

235,555

38,558

OTHER INCOME
Income from financial assets
Interest/mark-up on loans and advances
Exchange gain on realisation of export receivables
Income from non-financial assets
Gain on sale of property, plant and equipment
Scrap sales
GIDC paid in preceding years-Reversed

Annual Report/2014

13.5

88

2014
Rs. 000s

Note
31

2013

FINANCE COST
Mark-up on long term financing
Mark-up on short term borrowings
Profit on murabaha
Interest on workers' profit participation fund
Bank charges and commission

31.2

302,851
694,384
45,753
3,762
116,100
1,162,850

291,354
842,993
40,340
93,964
1,268,651

31.1

Mark-up on long term financing and short term borrowings include Rs. 69 million (2013: Rs. 58 million) and Rs. 15
million (2013: Rs. 58 million) respectively from related party Habib Metropolitan Bank Limited - Associated Company.

31.2

It includes exchange gain of Rs. 63 million (2013: exchange loss of Rs. 53 million) on short term borrowings in
foreign currency.
2014
2013
Note

Rs. 000s
Re-stated

32

PROVISION FOR T AXATION


Current
- for the year
- prior
Deferred
32.1

235,221
8,552
243,773
17,406
261,179

151,032
(54,041)
96,991
43,483
140,474

1,495,977

851,537

34%

35%

508,632

298,038

(142,368)
8,552
(116,560)
657
2,266
(247,453)
261,179

(92,976)
(54,041)
4,461
(9,554)
(5,454)
(157,564)
140,474

1,234,798

711,063

32.1 Reconciliation between accounting profit and tax expense


Net Profit for the year before taxation
Tax rate
Tax on accounting profit
Tax effect of
Tax credit
Prior year
Final tax on exports
Admissible/inadmissible
Rate differences and others

33

EARNINGS PER SHARE - basic and diluted


Profit for the year

89

Weighted average number of shares

33.1

182,818,218

174,062,102

Earnings per share (Rs.)

33.2

6.75

4.09

Annual Report/2014

34

33.1

Weighted average number of shares in issue during last year have been re-stated for the effect of bonus shares
issued during current year.

33.2

There is no dilutive effect on the earnings per share of the Company as the Company has no potential ordinary
shares.

SEGMENT INFORMA TION


The Company has the following two reportable business segments:
a) Spinning :
b) Processing :

Production of different qualities of yarn using both natural and artificial fibers.
Production of greige fabric, its processing into various types of fabrics for sale as well as to
manufacture and sale of made-ups and home textile products.

Transactions among the business segments are recorded at cost.


34.1 Segment profitability
Spinning
2014

2013

Elimination of Inter
Segment Transactions

Processing
2014

2013

2014

2013

Total
2014

2013

33,012,724
27,036,675

30,242,719
25,491,927

Rs. 000s
Sales
Cost of sales

9,924,339
9,093,155

10,703,756
9,605,299

831,184

1,098,457

5,144,865

3,652,335

5,976,049

4,750,792

214,952

257,126

3,221,628

2,339,680

3,436,580

2,596,806

616,232

841,331

1,923,237

1,312,655

2,539,469

2,153,986

Other operating expenses


Other income
Finance cost

116,197
(235,555)
1,162,850
1,043,492

72,356
(38,558)
1,268,651
1,302,449

Profit before taxation


Taxation

1,495,977
261,179

851,537
140,474

Profit after taxation

1,234,798

711,063

Gross profit
Distribution and
Administrative expenses
Profit before tax and
before charging following

28,310,803
23,165,938

21,780,906
18,128,571

(5,222,418)
(5,222,418)

(2,241,943)
(2,241,943)

34.2 Segment assets and liabilities


Spinning
2014

2013

Processing
2014

Unallocated

2013

2014

Total Company

2013

2014

2013

Rs. 000s

Assets

5,134,995

5,574,899

16,305,487

13,668,111

2,836,725

1,945,920

24,277,207

21,188,930

Liabilities

2,032,155

815,183

5,729,788

4,680,755

9,855,361

10,264,490

17,617,304

15,760,428

34.3

Unallocated items represent those assets and liabilities which are common to all segments and investment in subsidiary.

34.4

Information about major customers


Revenue from major customers whose revenue exceeds 10% of gross sales is Rs. 8,939 million (2013: Rs. 5,490
million).

Annual Report/2014

90

34.5

Information by geographical area


Revenue
2014

Non-current assets
2014
2013

2013
Rs. 000s

Pakistan
Germany
United Kingdom
China
United States
Netherland
France
Brazil
United Arab Emirates
Other Countries

11,354,969
6,053,568
2,163,680
1,669,259
2,626,257
1,934,723
1,602,332
339,723
198,352
5,069,861

13,120,459
3,141,496
2,959,899
2,098,851
2,065,066
1,021,286
1,326,246
503,155
242,358
3,763,903

8,322,853
58,450
-

7,208,615
58,450
-

Total

33,012,724

30,242,719

8,381,303

7,267,065

2014
Note
35

CASH AND CASH EQUIVALENTS


Cash and bank balances
Short term borrowings

36

24
12

114,954
(7,829,770)
(7,714,816)

101,921
(8,290,416)
(8,188,495)

REMUNERA TION OF CHIEF EXECUTIVES, DIRECTORS AND EXECUTIVES


2014

2013

Chief
Directors Executives
Executives
Managerial remuneration
House rent allowance
Other allowances
Contribution to provident fund

Number of persons

91

2013

Rs. 000s

Chief
Directors Executives
Executive
Rs. 000s

Total

Total

5,600
2,240
560
467

9,300
3,720
930
775

330,755
132,280
46,539
23,801

345,655
138,240
48,029
25,043

4,800
1,920
730
400

10,400
4,160
1,482
866

253,062
101,224
44,361
18,815

268,262
107,304
46,573
20,081

8,867

14,725

533,375

556,967

7,850

16,908

417,462

442,220

294

300

241

245

36.1

The Chief Executive, Directors and certain Executives are provided with free use of Company maintained cars and are also
covered under Company's Health Insurance Plan along with their dependents.

36.2

The Chief Executive and two Directors are also provided with free residential telephones.

36.3

Aggregate amount charged in the accounts for the year, for meeting fee to five Non-Executive Directors and the Chairman
was Rs. 800,000 (2013: five Non-Executive Directors Rs. 450,000).

36.4

Executive means an employee other than the Chief Executive and Executive Directors, whose basic salary exceeds five
hundred thousand rupees in a financial year.

36.5

Chief Executive remuneration includes remuneration to former Chief Executive Mr. Mohomed Bashir upto March, 2014 and
remuneration of newly appointed Chief Executive Mr. Mohammed Zaki Bashir effective from April, 2014.

36.6

Directors remuneration included remuneration of outgoing Director Mr. Abdul Aziz Yousuf upto March, 2014 and thereafter his
remuneration has been included in the category of "Executives" and remuneration of Mr. Ziad Bashir upto March, 2014 as
thereafter his remuneration has been discontinued and inclusion of remuneration to director Mr. Zain Bashir effective from
April, 2014.

Annual Report/2014

37

TRANSACTIONS AND BALANCES WITH RELATED PARTIES


Related parties comprise subsidiaries, associated companies, companies where directors also hold directorship, directors of
the Company and key management personnel. The Company in the normal course of business carries out transactions with
various related parties.
2014
2013
Rs. 000s
Relationship with
the Company

Nature of Transactions

Subsidiaries and
indirect subsidiaries

Purchase of goods
Sales of goods
Commission paid

Associated companies
and others related parties

Purchase of goods
Sale of goods
Rent paid
Fees paid
Commission earned
Bills discounted
Commission/Bank charges paid
Mark-up/interest charged
Companys contribution to provident fund

Relationship with
the Company

Nature of Outstanding Balances

Subsidiaries and
indirect subsidiaries

Corporate guarantee issued in favour


of subsidiary company
Trade & other payable
Long term investment
Trade debts

Associated companies
and others related parties

Deposit with bank


Borrowing from bank
Bank guarantee
Trade & other payable
Accrued mark-up
Advances to suppliers
Loans to key management personnel & executives
Payable to employees provident fund

188,786
143,346

43,001
713,967
64,147

97,188
957
7,200
1,375
3,451
3,341,649
53,503
83,765
71,609

79,208
5,029
7,200
1,250
4,863
1,801,027
38,083
116,260
56,935

109,398
17,517
58,450
40,558

102,260
62,440
58,450
35,147

3,504
1,213,072
567,241
11,284
18,619
4,763
15,680
9,016

35,341
1,238,406
268,628
11,389
17,942
1,534
2,075
7,712

There are no transactions with directors and key management personnel of the Company other than under the terms of
employment. Loans and remuneration of the directors, key management personnel and executives are disclosed in note
no.17 and 36, respectively.
Related parties status of outstanding receivables and payables as at June 30, 2014 are also included in respective notes to
the financial statements.

Annual Report/2014

92

38

CAP ACITY AND PRODUCTION


2014

Unit

Capacity

2013

Production

Working

Capacity

000s

Production

Working

000s

Cloth

Sq. meters
(50 Picks converted)

136,745

80,025

3 shifts

136,745

83,819

3 shifts

Yarn

Kgs.
(20 Counts converted)

51,341

36,096

3 shifts

49,055

37,501

3 shifts

Production is lower due to variation in production mix due to production of high value items and various technical factors.
39

FINANCIAL ASSETS AND LIABILITIES


Financial assets and liabilities of the Company as at June 30, 2014 are as follows

Interest/mark-up/profit bearing
Maturity
upto one
year

Maturity
after one
year

Sub
total

2014
Non interest/mark-up/profit bearing
Maturity
upto one
year

Maturity
after one
year

Sub
total

Total

Rs. 000s
Financial assets
Investment in subsidiary
Long term investment

58,450

58,450

58,450

2,293
2,293

4,716
4,716

7,009
7,009

3,080
1,366,694
65,168
114,954
1,549,896

7,185
81,034
146,669

10,265
81,034
1,366,694
65,168
114,954
1,696,569

17,274
81,034
1,366,694
65,168
114,954
1,703,574

694,706
7,829,770
442,304
8,966,780

2,239,239
2,239,239

2,933,945
7,829,770
442,304
11,206,019

5,503,699
177,164
5,680,863

5,503,699
177,164
5,680,863

2,933,945
7,829,770
5,946,003
177,164
16,886,882

1,279,730
2,900,378
3,012,647
7,192,755

1,279,730
2,900,378
4,985,576
9,165,684

1,279,730
2,900,378
4,985,576
9,165,684

Loans and receivables


Loans and advances
Long term deposits
Trade debts
Other receivables
Cash and bank balances

Financial liabilities
At Amortized cost
Long term financing
Short term borrowings
Trade and other payables
Accrued mark-up/profit

Off balance sheet items


Guarantees
Bills discounted
Commitments

93

1,972,929
1,972,929

Annual Report/2014

Financial assets and liabilities of the Company as at June 30, 2013 are as follows:

Interest/mark-up/profit bearing
Maturity
upto one
year

Maturity
after one
year

Sub
total

2013
Non interest/mark-up/profit bearing
Maturity
upto one
year

Maturity
after one
year

Sub
total

Total

Rs. 000s
Financial assets
Investment in subsidiary
Long term investment

58,450

58,450

58,450

702
51,312
110,464

962
51,312
2,573,268
54,279
101,921
2,840,192

3,415
51,312
2,573,268
54,279
101,921
2,842,645

3,486,662
191,792
3,678,454

2,716,937
8,290,416
4,039,455
191,792
15,238,600

616,117
2,215,854
2,846,297
5,678,268

616,117
2,215,854
2,846,297
5,678,268

Loans and receivables


Loans and advances
Long term deposits
Trade debts
Other receivables
Cash and bank balances

1,093
1,093

1,360
1,360

2,453
2,453

260
2,573,268
54,279
101,921
2,729,728

561,938
8,290,416
552,793
9,405,147

2,154,999
2,154,999

2,716,937
8,290,416
552,793
11,560,146

3,486,662
191,792
3,678,454

616,117
2,215,854
1,250,869
4,082,840

Financial liabilities
At Amortized cost
Long term financing
Short term borrowings
Trade and other payables
Accrued mark-up/profit

Off balance sheet items


Guarantees
Bills discounted
Commitments

40

1,595,428
1,595,428

FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES


Financial risk management objectives
The Company's activities exposes it to a variety of financial risks; market risk (including foreign exchange risk, interest
rate risk and price risk), credit risk and liquidity risk. The Company's overall risk management program focuses on the
unpredictability of financial markets and seeks to minimize potential adverse effects on the Company's financial
performance.
Risk management is carried out under policies and principles approved by the management. All treasury related
transactions are carried out within the parameters of these policies and principles.
The information about the Company's exposure to each of the above risk, the Company's objectives, policies and
procedures for measuring and managing risk and the Company's management of capital is as follows:

Annual Report/2014

94

40.1 Market risks


Market risk is the risk that the fair value or future cash flows of the financial instrument may fluctuate as a result
of changes in market interest rates or the market price due to change in credit rating of the issuer or the
instrument, change in market sentiments, speculative activities, supply and demand of securities, and liquidity
in the market. Market risk comprises of three types of risks: currency risk, interest rate risk and other price risk.
The company is exposed to currency risk and interest rate risk only.
a

Currency risk
Foreign currency risk represents the risk that the fair value of future cash flows of a financial instrument will
fluctuate because of changes in foreign exchange rates. Foreign currency risk arises mainly from future economic
transactions or receivables and payables that exist due to transactions in foreign exchange.
Exposure to foreign currency risk
The Company is exposed to foreign currency risk arising from foreign exchange fluctuations due to the following
financial assets and liabilities:
2014
2013
USD 000s
Long term investment
Trade debts
Cash and bank balances
Borrowings from financial institutions
Trade and other payables
Net exposure

1,000
5,704
26
(53,163)
(20,364)
(66,797)

1,000
6,321
91
(32,578)
(6,177)
(31,343)

The Company manages foreign currency risk through obtaining forward covers and due monitoring of the
exchange rates and net exposure.
Foreign currency commitments outstanding at year end are as follows:
2014

2013
000s

USD
EURO
JPY
CHF

23,098
539
180,560
27

7,515
1,339
3,310
-

The following significant exchange rates were applied during the year:
Rupees
Rupee per USD
Average rate
Reporting date rate

98.35
98.45/98.25

98.49
98.94/98.74

Foreign currency sensitivity analysis


A 5 percent strengthening/weakening of the PKR against the USD at June 30, 2014 would have increased/decreased
the equity and profit/loss after tax by Rs. 217 million (2013: Rs.104 million). The analysis assumes that all
other variables, in particular interest rates, remains constant. The analysis is performed on the same basis for
June 30, 2013.
The sensitivity analysis prepared is not necessarily indicative of the effects on profit for the year.

95

Annual Report/2014

Interest/mark-up/profit rate risk


Interest rate risk is the risk that the fair value or future cash flows of financial instruments will fluctuate due to
change in the interest/mark-up rates. The Company has long term finance and short term borrowings at fixed
and variable rates.
The Company is mainly exposed to interest/mark-up/profit rate risk on long and short term financing and these
are covered by holding "Prepayment Option" and "Rollover Option", which can be exercised upon any adverse
movement in the underlying interest rates.
Financial assets include balances of Rs. 7 million (2013: Rs. 2.4 million) which are subject to interest rate risk.
Financial liabilities include balances of Rs.11,206 million (2013: Rs. 11,560 million) which are subject to interest
rate risk. Applicable interest rates for financial assets and liabilities are given in respective notes.
Cash flow sensitivity analysis for variable rate instruments
At June 30, 2014, if interest rates on long term financing would have been 1% higher/lower with all other variables
held constant, post tax profit for the year would have been Rs 3.95 million (2013: Rs 3.9 million) lower/higher,
mainly as a result of higher/lower interest expense on floating rate borrowings.
At June 30, 2014, if interest rates on short term borrowings would have been 1% higher/lower with all other
variables held constant, post tax profit for the year would have been Rs. 35.1 million (2013: Rs. 64.4 million)
lower/higher, mainly as a result of higher/lower interest expense on floating rate borrowings.
Fair value sensitivity analysis for fixed rate instruments
The Company does not account for any fixed rate financial assets and liabilities at fair value through profit or
loss. Therefore, a change in interest rate at the balance sheet would not effect profit or loss of the Company.

Other Price risk


Price risk represents the risk that the fair value or future cash flows of a financial instrument will fluctuate because
of changes in market prices (other than those arising from interest or currency rate risk), whether those changes
are caused by factors specified to the individual financial instrument or its issuer or factors affecting all similar
financial instruments traded in the market. The Company is not exposed to equity price risk.

40.2 Credit risk


Credit risk is the risk of financial loss to the company if a customer or counterparty to a financial instrument fails
to meet its contractual obligations.
Exposure to credit risk
Company's operating activities exposes it to credit risks arising mainly in respect of loans and advances, trade
debts, deposits, other receivables and cash at bank. The maximum exposure to credit risk at the reporting date
is as follows:

Annual Report/2014

96

2014
Note
Loans and advances
Long term deposit
Trade debts
Other receivables
Bank balances

17
20
24

2013
Rs. 000s

17,274
81,034
1,366,694
65,168
108,117
1,638,287

3,415
51,312
2,573,268
54,279
93,675
2,775,949

The Company manages credit risk as follows:


Loans and advances
These loans are due from employees and are secured against vehicles, outstanding balance of provident fund and
retirement dues of the relevant employee. In addition, the Company obtains guarantees by two employees against each
disbursement on account of loans and these are up to the extent of loans outstanding as at the date of default. The
guarantor will pay the outstanding amount if the counter party will not meet their obligation.
The Company actively pursues for the recovery of these loans and the Company does not expect these employees will
fail to meet their obligations hence no impairment allowance is made.
Trade debts
Trade debts are due from local and foreign customers. The Company manages credit risk inter alia by setting out credit
limits in relation to individual customers and/or by obtaining advance against sales and/or through letter of credits and
/or by providing for doubtful debts.
Export debts are secured under irrevocable letter of credit, document acceptance, cash against documents and other
acceptable banking instruments.
The Company actively pursues for the recovery of the debt and based on past experience and business relationship
and credit worthiness of these customers. The Company does not expect these customers will fail to meet their obligations
except for some doubtful debtors against which adequate allowance for impairment have been made in these financial
statements.
The Company has established an allowance for the doubtful trade debts that represent its estimate of incurred losses
in respect of trade debts. This allowance is based on the management assessment of a specific loss component that
relates to individually significant exposures. The movement in allowance for impairment in respect of trade debts during
the year can be assessed by reference to note 20.
Aging of trade debts is as follows:
2014

2013
Rs. 000s

1 to 6 months
6 months to 1 year
1 year to 3 years

1,324,839
16,492
25,363
1,366,694

2,503,470
49,028
20,770
2,573,268

The Company believes that no impairment allowance is necessary in respect of trade debts that are past due other than
the amount provided.
Other receivables
The Company believes that no impairment allowance is necessary in respect of receivables that are past due. The
Company is actively pursuing for the recovery and the Company does not expect that the recovery will be made soon
and can be assessed by reference to note no. 21.

97

Annual Report/2014

Bank balances
The Company limits its exposure to credit risk by maintaining bank accounts only with counter-parties that have stable
credit rating.
The bank balances along with credit ratings are tabulated below:
2014

2013
Rs. 000s

AAA
AA+
AA
A+
A
AAA-

17,995
4,173
20,688
52,817
4,854
49
7,541
108,117

1,033
69,242
2,500
19,639
817
444
93,675

Given these high credit ratings, management does not expect that any counter party will fail to meet their obligations.
Financial assets that are either past due or impaired
The credit quality of financial assets that are either past due or impaired can be assessed by reference to historical
information and external ratings or to historical information about counter party default rates.
The management believes that there are no financial assets that are impaired except against which provision has been
made as a matter of prudence.
40.3 Liquidity risk
Liquidity risk represents the risk where the Company will encounter difficulty in meeting obligations associated
with financial liabilities when they fall due. The exposure to liquidity risk along with their maturities disclosed
in respective notes and in note no. 39.
The Company manages liquidity risk by maintaining sufficient cash and ensuring the fund availability through
adequate credit facilities. At June 30, 2014, the Company has Rs. 14,342 million (2013: Rs. 12,350 million)
available borrowing limit from financial institutions. Unutilized borrowing facilities of Rs. 6,162 million (2013:
Rs. 3,560 million) and also has Rs. 108 million (2013: Rs. 94 million) being balances at banks. Based on the
above, management believes the liquidity risk is insignificant.
40.4 Fair value of financial instruments
Fair value is an amount for which an asset could be exchanged, or a liability settled, between knowledgeable
willing parties in an arm's length transaction. Consequently, differences may arise between the carrying values
and the fair value estimates.
The carrying values of all the financial assets and liabilities reflected in the financial statements approximate their
fair values except long term investment in subsidiary note no. 16.
40.5 Capital risk management
The primary objectives of the Company when managing capital are to safeguard the Company's ability to continue as a
going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal
capital structure.

Annual Report/2014

98

The Company manages its capital structure and makes adjustment to it, in light of changes in economic conditions.To
maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders or issue new
shares.
The Company's strategy is to maintain leveraged gearing. The gearing ratios as at June 30, 2014 and 2013 were as follows:
2014

2013
Rs. 000s

Total borrowings
Cash and bank
Net debt

10,763,715
(114,954)
10,648,761

11,007,353
(101,921)
10,905,432

Total equity
Total equity and debt

6,659,903
17,308,664

5,428,502
16,333,934

62

67

Gearing ratio (%)

The Company finances its operations through equity, borrowings and management of working capital with a view to
maintain an appropriate mix amongst various sources of finance to minimize risk and borrowing cost.
2014

Note
41

2013

Un-audited

PROVIDENT FUND RELATED DISCLOSURES

Audited

The following information based on latest


financial statements of the fund:
Size of the fund - Total assets (Rs. 000s)
Cost of investments made (Rs. 000s)
Percentage of investments made
Fair value of investments (Rs. 000s)

41.1

602,870
520,170
86.28%
558,618

41.1

The break-up of fair value of investment is:

500,775
434,582
86.78%
467,698

2014

2013

Un-audited
Rs. 000s

Shares in listed companies


Government securities
Debt securities
Mutual funds
Balance in saving accounts

41.2

42

35,953
189,041
110,401
134,588
88,635
558,618

6.44%
33.84%
19.76%
24.09%
15.87%
100.00%

Audited
Rs. 000s

26,314
202,513
133,971
98,942
5,958
467,698

5.63%
43.30%
28.64%
21.16%
1.27%
100.00%

The investments out of provident fund have been made in accordance with the provisions of Section 227 of the
Companies Ordinance, 1984 and rules formulated for this purpose.

NUMBER OF PERSONS
Number of persons employed as on year end were 12,814 (2013: 12,436) and average number of employees during
the year was 12,679 (2013: 12,369)

99

Annual Report/2014

43

EVENT AFTER BALANCE SHEET DATE


43.1 Subsequent Effects
The Board of Directors of the Company in its meeting held on September 27, 2014 has proposed the following:
a) Bonus Shares
Your directors have decided to issue 25% bonus shares on the existing paid up capital of the Company in
the ratio of one share for every four shares held.
b) Dividend
Your directors have decided to pay cash dividend @ Rs. 1.50 per share i.e. 15% for the year ended June
30, 2014. Holding Company and an Associated Company have agreed to relinquish their portion of
cash dividend.
c) T ransfer from Unappropriated Profit
An amount of Rs. 650 million to be transferred to general reserve from un-appropriated profit
43.2 Fire in W arehouse:
On July 26, 2014, there was an unfortunate fire incident on the third floor of one of our warehouses. Goods stored
on this floor were damaged. Adequate insurance cover to mitigate the loss is in place. Estimate of the loss is
around Rs. 400 million. All the Company's production facilities are working soundly. There is no disruption in any
operation.

44

DA TE OF AUTHORIZATION
These financial statements were authorized for issue on September 27, 2014 by the Board of Directors of the Company.

45

CORRESPONDING FIGURES
For better presentation, reclassification made in the financial statements is as follows:
Reclassification from

46

Reclassification to

Amount
Rs.000s

Sales
Export Sales

Financial charges
Bank Charges

41,131

Trade and Other payables


Others
Others

Trade and Other payables


Taxes withheld
Accrued expenses

16,071
7,903

GENERAL
Figures have been rounded of f to the nearest thousand rupees.

MOHOMED BASHIR
Chairman

Annual Report/2014

MOHAMMED ZAKI BASHIR


Chief Executive Officer

100

Board
Name of Director

Audit Committee

*Required Attended

Required Attended

Human Resource &


Remuneration Committee
Required

Attended

Mohomed Bashir

Zain Bashir

Mohammed Zaki Bashir

Ziad Bashir

Abdul Aziz Yousuf

S.M. Nadim Shafiqullah

Abdul Razak Bramchari

Dr. Amjad Waheed

Adnan Afridi

* held during the period the concerned Director was on the Board.

101

Annual Report/2014

No. of Shareholders
671
944
549
549
106
32
27
14
11
8
8
5
8
2
4
1
1
4
1
1
1
6
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1

Shareholding
From
From
From
From
From
From
From
From
From
From
From
From
From
From
From
From
From
From
From
From
From
From
From
From
From
From
From
From
From
From
From
From
From
From
From
From
From
From
From
From
From
From

1
101
501
1,001
5,001
10,001
15,001
20,001
25,001
30,001
35,001
40,001
45,001
50,001
55,001
60,001
65,001
70,001
75,001
80,001
85,001
95,001
105,001
120,001
130,001
140,001
160,001
200,001
205,001
220,001
230,001
280,001
295,001
445,001
495,001
780,001
3,975,001
4,885,001
5,480,001
16,070,001
17,825,001
123,310,001

to
to
to
to
to
to
to
to
to
to
to
to
to
to
to
to
to
to
to
to
to
to
to
to
to
to
to
to
to
to
to
to
to
to
to
to
to
to
to
to
to
to

Shares held
100
500
1,000
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
55,000
60,000
65,000
70,000
75,000
80,000
85,000
90,000
100,000
110,000
125,000
135,000
145,000
165,000
205,000
210,000
225,000
235,000
285,000
300,000
450,000
500,000
785,000
3,980,000
4,890,000
5,485,000
16,075,000
17,830,000
123,315,000

2,973
Categories of Shareholders
Individuals
Investment Companies & Mutual Funds
Insurance Companies
Joint Stock Companies
Modaraba Companies
Financial Institutions
Foreign Investors
Charitable Institutions
Government Departments

Annual Report/2014

23,740
333,533
440,404
1,395,364
836,224
428,872
509,499
332,238
312,790
273,500
312,729
216,172
394,028
103,500
231,000
60,844
68,904
296,785
80,000
80,721
86,000
590,566
107,500
125,000
133,499
141,764
162,000
202,000
205,513
225,000
231,000
281,000
300,000
449,173
500,000
785,000
3,978,619
4,888,821
5,481,006
16,072,701
17,826,657
123,314,552
182,818,218

Number
2,915
33
5
10
1
1
2
4
2
2,973

Shares Held

Percentage

8,972,364
5,100,344
5,688,938
128,975,620
180
295
33,899,358
180,722
397
182,818,218

4.91
2.79
3.11
70.55
18.54
0.10
100.00

102

Additional Information
Categories of Shareholders
Associated Companies, Undertakings and Related Parties
Gul Ahmed Holdings (Private) Limited
Swisstex Chemicals (Private) Limited
Trustee - Gul Ahmed Textile Mills Limited Employees Provident Fund Trust

Number

Shares held

1
1
1

123,314,552
5,531,006
98,066

NIT and ICP


IDBP (ICP Unit)
National Bank of Pakistan - Trustee Department
National Bank of Pakistan - Trustee Department NI(U)T Fund
Trustee National Bank of Pakistan Employees Benevolent Fund Trust
Trustee National Bank of Pakistan Employees Pension Fund

1
1
1
1
1

4,215
458
3,978,619
2,629
74,934

Mutual Funds
CDC Trustee Alfalah GHP Alpha Fund
CDC Trustee First Habib Stock Fund
CDC Trustee IGI Stock Fund
Banks, NBFI, DFI and Investment Companies
Insurance Companies
Joint Stock Companies
Modaraba Companies
Financial Institutions
Foreign Investors
Charitable Institutions
Government Departments

1
1
1
24
5
8
1
1
2
4
2

36,000
15,000
125,000
765,423
5,688,938
130,062
180
295
33,899,358
180,722
397

DIRECTORS
Mohomed Bashir (Chairman)
Zain Bashir (Vice Chairman)
Mohammed Zaki Bashir (Chief Executive)
Ziad Bashir
S.M. Nadim Shafiqullah
Dr. Amjad Waheed
Adnan Afridi

1
1
1
1
1
1
1

2,500
2,500
2,500
2,500
8,280
7,200
7,200

DIRECTORS'/CEO'S SPOUSE:
Parveen Bashir
Tania Zain

1
1

2,500
2,500

7,200

1
1
1

123,314,552
16,072,701
17,826,657

CHIEF FINANCIAL OFFICER (CFO)


Mohammed Saleem Sattar
Shareholders holding 5% or more Voting Interest
Gul Ahmed Holdings (Private) Limited
Hamdan Holdings Limited
Metalcrest Limited
Details of trading in the shares by:
DIRECTORS
Mohomed Bashir
Zain Bashir
Zain Bashir
Mohammed Zaki Bashir
Ziad Bashir
DIRECTORS'/CEO'S SPOUSE:
Parveen Bashir
Tania Zain

21,676,382
1,070,513
13,622,384
3,797,990
3,797,990

Shares acquired as gift from family members


Shares given as gift to family member
Shares acquired as gift from family member
Shares given as gift to family member
Shares given as gift to family member

13,009,889
13,622,384

Shares given as gift to family member


Shares given as gift to family member

During the year the following shares of Mr. Mohomed Bashir (Chairman) and his family members have been transferred in one direction
for group fomation to Gul Ahmed Holdings (Private) Limited in accordance with the Group Companies Registration Regulation 2008.
DIRECTORS
Mohomed Bashir
Zain Bashir
Mohammed Zaki Bashir
Ziad Bashir

103

NO. OF SHARES
30,828,638
30,828,638
30,828,638
30,828,638

Annual Report/2014

Consolidated
Financial Statements
2014

Annual Report/2014

104

The directors are pleased to present their report together with the audited Group Consolidated Financial
Statements for the year ended June 30, 2014.
The Group
The Group comprises of Gul Ahmed International Limited (FZC) - UAE, GTM (Europe) Limited - UK and GTM USA Corp. - USA,
wholly owned subsidiaries. All the subsidiaries are engaged in trading of textile related products.
Group Results
The consolidated financial results of the Group are given below:
Rs. '000s
Profit before tax
Taxation
Profit after tax
Un-appropriated profit brought forward
Amount available for appropriation
Appropriation
Transfer to general reserves
Transfer to statutory reserve
Amount carried to other comprehensive Income
Issue of bonus shares
Amount carried forward

1,477,459
(256,448)
1,221,011
824,837
2,045,848

400,000
1,546
3397
304,696
1,336,209
2,045,848

Earnings per share (Rs.)

6.68

Pattern of Shareholding
Gul Ahmed International Limited (FZC) - UAE is a wholly owned subsidiary of Gul Ahmed Textile Mills Limited (Parent Company),
GTM (Europe) Limited is wholly owned subsidiary of Gul Ahmed International Limited (FZC) - UAE and GTM USA Corp. is a
wholly owned subsidiary of GTM (Europe) Limited.
Parent Company is now subsidiary of Gul Ahmed Holdings (Private) Limited holding 123,314,552 (67.45%) shares.
Subsequent Effects
The directors of the Group in their meeting held on September 27, 2014 have proposed the following:
1.

Cash Dividend: Your directors have decided to pay cash dividend @ Rs. 1.50 per share i.e. 15% for the year ended June
30, 2014. Holding Company and an Associated Company have agreed to relinquish their portion of cash dividend.

2.

Bonus Shares: Your directors have decided to issue 25% bonus shares on the existing paid up capital of the Company
in the ratio of one share for every four shares held.

3.

Reserves: An amount of Rs. 650 million to be transferred to general reserve from un - appropriated profit
By order of the Board

Karachi
September 27, 2014

105

Mohammed Zaki Bashir


Chief Executive Officer

Annual Report/2014

We have audited the annexed consolidated financial statements comprising consolidated Balance Sheet of Gul Ahmed Textile
Mills Limited (the Holding Company) and Gul Ahmed International Limited (FZC), GTM (Europe) Limited and GTM USA Corp.
(the Subsidiaries) as at June 30, 2014 and the related consolidated Profit and Loss Account, consolidated Statement of
Comprehensive Income, consolidated Cash Flow Statement and consolidated Statement of Changes in Equity together with
the notes forming part thereof, for the year then ended. We have also expressed separate opinion on the financial statements
of the Holding Company. The financial statements of Gul Ahmed International Limited (FZC), GTM (Europe) Limited and GTM
USA Corp. (the Subsidiaries) have been audited by other firms of auditors, whose reports have been furnished to us and our
opinion, in so far as it relates to the amounts included for such Subsidiaries, is based solely on the report of such other auditors.
These financial statements are the responsibility of the Holding Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
Our audit was conducted in accordance with the International Standards on Auditing and accordingly included such tests of
accounting records and such other auditing procedures as we considered necessary in the circumstances.
In our opinion, the consolidated financial statements examined by us present fairly the financial position of Gul Ahmed Textile
Mills Limited and its Subsidiaries as at June 30, 2014 and the result of their operations for the year then ended.

Karachi
September 27, 2014

KRESTON HYDER BHIMJI & CO


Chartered Accountants
Engagement Partner: Shaikh Mohammad Tanvir

Annual Report/2014

106

2014
Note

2013
Rs. 000s

EQUITY AND LIABILITIES


SHARE CAPITAL AND RESERVES
Share capital

1,828,182

1,523,486

Reserves

3,688,803

3,268,511

1,336,209

824,837

6,853,194

5,616,834

2,239,239

2,154,999

Deferred taxation - net

338,936

326,526

Staff retirement benefits

44,816

40,303

383,752

366,829

6,428,420

4,248,013

Unappropriated profit

NON-CURRENT LIABILITIES
Long term financing
Deferred liabilities

CURRENT LIABILITIES
Trade and other payables
Accrued mark-up/profit

11

177,164

Short term borrowings

12

7,829,770

Current maturity of long term financing

694,706

561,938

15,130,060

13,292,159

24,606,245

21,430,821

CONTINGENCIES AND COMMITMENTS

107

10

191,792
8,290,416

13

Annual Report/2014

2014
Note

2013
Rs. 000s

ASSETS
NON-CURRENT ASSETS
Property, plant and equipment

14

8,217,907

7,144,238

Intangible assets

15

24,020

27,242

Long term loans and advances

16

11,901

2,061

Long term deposits

81,034

51,312

8,334,862

7,224,853

CURRENT ASSETS
Stores, spare parts and loose tools

17

855,530

723,435

Stock-in-trade

18

12,129,702

9,673,821

Trade debts

19

1,482,683

2,702,373

Loans and advances

20

404,734

352,058

95,018

46,718

Other receivables

21

346,027

177,592

Tax refunds due from Government

22

655,664

231,018

177,812

189,596

23

124,213

109,357

16,271,383

14,205,968

24,606,245

21,430,821

Short term deposits and prepayments

Income tax refundable-payments less provision


Cash and bank balances

The annexed notes 1 - 45 form an integral part of these consolidated financial statements.

MOHOMED BASHIR
Chairman

Annual Report/2014

MOHAMMED ZAKI BASHIR


Chief Executive Officer

108

2014
Note

2013
Rs. 000s
Re-stated

Sales

24

33,698,111

30,633,892

Cost of sales

25

27,418,741

25,678,935

6,279,370

4,954,957

Gross profit
Distribution cost

26

2,184,014

1,536,025

Administrative expenses

27

1,559,796

1,252,790

Other operating expenses

28

116,311
3,860,121

72,356
2,861,171

2,419,249

2,093,786

235,555

39,033

2,654,804

2,132,819

1,177,345

1,283,887

1,477,459

848,932

256,448

141,143

1,221,011

707,789

6.68

4.07

Other income

29

Operating profit
Finance cost

30

Profit before taxation


Provision for taxation

31

Profit after taxation


Earnings per share - basic and diluted (Rs.)

32

The annexed notes 1 - 45 form an integral part of these consolidated financial statements.

MOHOMED BASHIR
Chairman

109

MOHAMMED ZAKI BASHIR


Chief Executive Officer

Annual Report/2014

2014

2013
Rs. 000s
Re-stated

Profit after taxation

1,221,011

707,789

(3,910)
513
(3,397)

(10,409)
1,424
(8,985)

18,746

11,065

1,236,360

709,869

Other comprehensive income


Items that will not be reclassified to profit and loss
account subsequently
Remeasurement loss on defined benefit plan
Tax effect on remeasurement loss

Items that will be reclassified to profit and loss


account subsequently
Exchange difference on translation of foreign subsidiaries

Total comprehensive income

The annexed notes 1 - 45 form an integral part of these consolidated financial statements.

MOHOMED BASHIR
Chairman

MOHAMMED ZAKI BASHIR


Chief Executive Officer

Annual Report/2014

110

2014
Note

2013
Rs. 000s
Re-stated

CASH FLOWS FROM OPERATING ACTIVITIES


Profit before taxation
Adjustments for:
Depreciation
Amortization
Provision for gratuity
Finance cost
Provision for slow moving/obsolete items
Provision for doubtful debts
Property, plant and equipment scrapped
Gain on sale of property, plant and equipment - net
Cash flows from operating activities before adjustments of working capital
Changes in working capital:
(Increase)/decrease in current assets
Stores, spare parts and loose tools
Stock-in-trade
Trade debts
Loans and advances
Short term deposits and prepayments
Other receivables
Tax refunds due from Government
Increase in current liabilities
Trade and other payables

Adjustments for
Gratuity paid
Finance cost paid
Income tax paid
(Increase)/decrease in long term loans and advances
Increase in long term deposits
Net cash generated from/(used in) operating activities

1,477,459

848,932

856,477
12,507
28,762
1,177,345
17,952
30,775
4,421
(106,020)
2,022,219
3,499,678

775,977
13,766
17,152
1,283,887
15,011
29,825
5,490
(17,080)
2,124,028
2,972,960

(150,047)
(2,455,881)
1,188,915
(52,676)
(48,300)
(168,435)
(424,646)
(2,111,070)

1,540
(2,191,987)
(459,933)
(176,447)
(7,231)
5,107
(205,115)
(3,034,066)

2,180,407
69,337
3,569,015

1,529,870
(1,504,196)
1,468,764

(28,159)
(1,191,973)
(231,741)
(9,840)
(29,722)
(1,491,435)
2,077,580

(15,210)
(1,263,707)
(298,550)
839
(3,511)
(1,580,139)
(111,375)

(1,970,456)
(9,285)
141,909
(1,837,832)

(1,149,104)
(8,028)
76,401
(1,080,731)

CASH FLOWS FROM INVESTING ACTIVITIES


Addition to property, plant and equipment
Addition to intangible assets
Proceeds from sale of property, plant and equipment
Net cash used in investing activities

111

Annual Report/2014

2014
Note

2013
Rs. 000s
Re-stated

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long term financing


Repayments of long term financing
Proceeds from issue of right shares
Net cash generated from financing activities

789,322
(572,314)
-

619,510
(663,641)
253,915

217,008

209,784

18,746

11,065

475,502

(971,257)

(8,181,059)

(7,209,802)

(7,705,557)

(8,181,059)

Exchange difference on translation of foreign subsidiaries


Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents - at the beginning of the year
Cash and cash equivalents - at the end of the year

34

The annexed notes 1 - 45 form an integral part of these consolidated financial statements.

MOHOMED BASHIR
Chairman

MOHAMMED ZAKI BASHIR


Chief Executive Officer

Annual Report/2014

112

Share
capital

Revenue
reserve

Exchange
difference on
translation of
foreign
subsidiaries

Statutory
reserve

(Accumulated
loss)/
Unappropriated
profit

Total

Rs. 000s

Balance as at June 30, 2012


Transfer of reserves
Transfer from revenue reserve
Transfer to statutory reserve

1,269,571

3,430,000

67,091

(250,000)
(250,000)

10,146

(123,758)

4,653,050

209
209

250,000
(209)
249,791

Total comprehensive income for the


year ended June 30, 2013 - as re-stated
Profit for the year - as re-stated
Other comprehensive income - as re-stated

11,065

707,789
(8,985)

707,789
2,080

11,065

698,804

709,869

253,915

253,915

78,156

10,355

824,837

Transaction with owners


Issue of right shares
Balance as at June 30, 2013
Transfer of reserves
Transfer to revenue reserve
Transfer to statutory reserve

1,523,486

3,180,000

5,616,834

400,000
-

1,546

(400,000)
(1,546)

400,000

1,546

(401,546)

18,746

1,221,011
(3,397)

1,221,011
15,349

18,746

1,217,614

1,236,360

304,696

(304,696)

96,902

11,901

Total comprehensive income for the


year ended June 30, 2014
Profit for the year
Other comprehensive income

Transaction with owners


Issue of bonus shares
Balance as at June 30, 2014

1,828,182

3,580,000

1,336,209

6,853,194

The annexed notes 1 - 45 form an integral part of these consolidated financial statements.

MOHOMED BASHIR
Chairman

113

MOHAMMED ZAKI BASHIR


Chief Executive Officer

Annual Report/2014

LEGAL STATUS AND ITS OPERATIONS


1.1

Gul Ahmed Group ("the Group") comprises the following:


- Gul Ahmed Textile Mills Limited
- Gul Ahmed International Limited (FZC) - UAE
- GTM (Europe) Limited - UK
- GTM USA Corp. - USA
Gul Ahmed Textile Mills Limited (The Holding Company) was incorporated on 1st April 1953 in Pakistan as a
private limited company, converted into public limited company on 7th January 1955 and was listed on Karachi
and Lahore Stock Exchanges in 1970 and 1971 respectively. The Holding Company is a composite textile mill
and is engaged in the manufacture and sale of textile products.
The Holding Company's registered office is situated at Plot No. 82, Main National Highway, Landhi, Karachi.
Gul Ahmed International Limited (FZC) - UAE is a wholly owned subsidiary of Gul Ahmed Textile Mills Limited,
GTM (Europe) Limited is a wholly owned subsidiary of Gul Ahmed International Limited (FZC) - UAE and GTM
USA Corp. is a wholly owned subsidiary of GTM (Europe) Limited.
All three subsidiaries are engaged in trading of textile related products.
The Holding Company is a subsidiary of Gul Ahmed Holdings (Private) Limited. note no. 5.2.1.
Details of Subsidiaries

Gul Ahmed International Limited


GTM (Europe) Limited
GTM USA Corp.
1.2

Date of
Incorporation

%
Holding

Country of
Incorporation

November 27, 2002


April 17, 2003
March 19, 2012

100%
100%
100%

U.A.E
U.K
U.S.A

Basis of consolidation
The financial statements include the financial statements of the Group.
Subsidiary companies are consolidated from the date on which more than 50% voting rights are transferred
to the Holding Company or power to govern the financial and operating policies over the subsidiary and is
excluded from consolidation from the date of disposal or cessation of control.
The financial statements of the subsidiaries are prepared for the same reporting period as the Holding Company,
using consistent accounting policies.
The assets and liabilities of the subsidiary companies have been consolidated on a line-by-line basis and the
carrying value of investment held by the Company is eliminated against the subsidiary's share capital. All intragroup balances and transactions are eliminated.

2.

BASIS OF PREP ARATION


2.1

Basis of measurement
These consolidated financial statements comprise of balance sheet, profit and loss account, statement of
comprehensive income, cash flow statement and statement of changes in equity together with explanatory
notes and have been prepared under the historical cost convention except as has been specifically stated
below in respective notes.

2.2

Statement of compliance
These consolidated financial statements have been prepared in accordance with approved accounting standards
as applicable in Pakistan. Approved accounting standards comprises of such International Financial Reporting
Standards (IFRS) issued by the International Accounting Standards Board, as are notified under the Companies
Ordinance, 1984, provisions of and directives issued under the Companies Ordinance, 1984. In case requirements
differ, the provisions or directives of the Companies Ordinance, 1984 shall prevail.

Annual Report/2014

114

2.3

Functional and presentation currency


These consolidated financial statements have been prepared in Pak Rupees, which is the Group's functional
currency. All financial information presented in Pak Rupees has been rounded to nearest thousand.

2.4

Critical accounting estimates and judgments


The preparation of these consolidated financial statements in conformity with approved accounting standards
requires the use of certain critical accounting estimates. It also requires the management to exercise its judgment
in the process of applying the Group's accounting policies. Estimates and judgments are continually evaluated
and are based on historical experience including expectations of future events that are believed to be reasonable
under the circumstances. The areas involving a higher degree of judgment or complexity or areas where
assumptions and estimates are significant to the financial statements, are as follows:
Defined benefit plan
Actuarial assumptions have been adopted as disclosed in note no. 9 to the financial statements for valuation of
defined benefit obligations.
Contingencies
The assessment of the contingencies inherently involves the exercise of significant judgment as the outcome
of the future events cannot be predicted with certainty. The Group, based on the availability of the latest
information, estimates the value of contingent assets and liabilities which may differ on the occurrence/nonoccurrence of the uncertain future event(s).
Useful lives, pattern of economic benefits and impairments
Estimate with respect to residual values and useful lives and patterns of flow of economic benefits are based
on the analysis of management of the Group. Further, the Group reviews the value of assets for possible
impairment on an annual basis. Any change in the estimate in the future might effect the carrying amount of
respective item of property, plant and equipment with the corresponding effect on the depreciation charge and
impairment.
Intangibles
The Group reviews appropriateness of useful life. Further, where applicable, an estimate of recoverable
amount of intangible asset is made for possible impairment on an annual basis.
Provision for obsolescence and slow moving spare parts and loose tools
Provision for obsolescence and slow moving spare parts is based on parameters set out by management.
Stock-in-trade
The Group reviews the net realizable value of stock-in-trade to assess any diminution in the respective
carrying values. Net realisable value is determined with reference to estimated currently prevailing selling
price/market price less estimated expenditures to make the sales.
Provision against trade debts, advances and other receivables
The Group reviews the recoverability of its trade debts, advances and other receivables to assess amount
of doubtful debts and provision required there against on annual basis. While determining provision, the Group
considers financial health, market information, ageing of receivables, credit worthiness, credit rating, past records
and business relationship.

115

Annual Report/2014

Taxation
The Group takes into account relevant provisions of the prevailing income tax laws while providing for current
and deferred taxes as explained in note no. 3.5 of these consolidated financial statements. Deferred tax
calculation has been made based on estimate of expected future ratio of export and local sales based on past
history.
2.5

Adoption of new and revised standards and interpretations


a

New and amended standards and interpretations became effective:


During the year, certain amendments to standards & revised standards have become effective; however,
they are either irrelevant or did not have material effect on these financial statements except for the effects
of Revised IAS-19 Employee Benefits as stated in note no. 4. Amendments/revision are as follows;

IAS-19

Employee Benefits - The amendment removes the options for accounting for the liability and
requires that the liabilities arising from such plans is recognized in full with actuarial gains and
losses being recognized in other comprehensive income (elimination of corridor method for
recognition of actuarial gains and losses). It also revised the method of calculating the return on
plan assets. The revised standard changes the definition of short-term employee benefits. The
distinction between short-term and other long-term employee benefits is now based on whether
the benefits are expected to be settled wholly within 12 months after the reporting date.

IFRS-7

Financial Instruments: Disclosures - Disclosures about offsetting of financial assets and


liabilities; these amendments require entities to disclose gross amount subject to right of set off,
amounts set off in accordance with accounting standards followed and the related net credit
exposure. These disclosures are intended to facilitate the evaluation of the effect or potential
effect of netting arrangements on an entitys financial position.

IAS-27

Separate Financial Statements (2011) - Amendment; The Standard requires that when an entity
prepares separate financial statements, investments in subsidiaries, associates and jointly
controlled entities are accounted for either at cost or in accordance with IFRS 9 Financial
Instruments/IAS 39 Financial Instruments: Recognition and Measurement. The Standard also
deals with the recognition of dividends, certain group reorganizations and includes a number of
disclosure requirements.

IAS-28

Investments in Associates and Joint Ventures - Amendment; This Standard supersedes IAS
28 Investments in Associates and prescribes the accounting for investments in associates and
sets out the requirements for the application of the equity method when accounting for investments
in associates and joint ventures. The Standard defines 'significant influence' and provides guidance
on how the equity method of accounting is to be applied (including exemptions from applying the
equity method in some cases). It also prescribes how investments in associates and joint ventures
should be tested for impairment.

Standards, Interpretations and Amendments not yet effective


The following standards, amendments and interpretations of approved accounting standards will be effective
for accounting periods beginning on or after 01 July 2014:
IFRIC 21 - Levies, an Interpretation on the accounting for levies imposed by governments (effective
for annual periods beginning on or after 01 January 2014).

Annual Report/2014

116

IFRIC 21 is an interpretation of IAS 37 Provisions, Contingent Liabilities and Contingent Assets.


IAS 37 sets out criteria for the recognition of a liability, one of which is the requirement for the
entity to have a present obligation as a result of a past event (known as an obligating event). The
interpretation clarifies that the obligating event that gives rise to a liability to pay a levy is the
activity described in the relevant legislation that triggers the payment of the levy.
Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities - (effective for annual
periods beginning on or after 01 January 2014).
The amendments address inconsistencies in current practice when applying the offsetting criteria in IAS
32 Financial Instruments: Presentation. The amendments clarify the meaning of currently has a legally
enforceable right of set-off; and that some gross settlement systems may be considered equivalent to net
settlement.
Amendment to IAS 36 Impairment of Assets Recoverable Amount Disclosures for Non-Financial Assets
(effective for annual periods beginning on or after 01 January 2014).
These narrow-scope amendments to IAS 36 Impairment of Assets address the disclosure of information
about the recoverable amount of impaired assets if that amount is based on fair value less costs of disposal.
Amendments to IAS 39 Financial Instruments: Recognition and Measurement Continuing hedge
accounting after derivative novation (effective for annual periods beginning on or after 01 January 2014).
The amendments add a limited exception to IAS 39, to provide relief from discontinuing an existing hedging
relationship when a novation that was not contemplated in the original hedging documentation
meets specific criteria.
Amendments to IAS 19 Employee Benefits Employee contributions - a practical approach (effective
for annual periods beginning on or after 01 July 2014).
The practical experience addresses an issue that arose when amendments were made in 2011 to the
previous pension accounting requirements. The amendments introduce a relief that will reduce the complexity
and burden of accounting for certain contributions from employees or third parties. The amendments are
relevant only to defined benefit plans that involve contributions from employees or third parties meeting
certain criteria.
Amendments to IAS 38 Intangible Assets and IAS 16 Property, Plant and Equipment (effective for
annual periods beginning on or after 01 January 2016).
This amendment introduces severe restrictions on the use of revenue-based amortization for intangible
assets and explicitly states that revenue-based methods of depreciation cannot be used for property, plant
and equipment. The rebuttable presumption that the use of revenue-based amortization methods for
intangible assets is inappropriate can be overcome only when revenue and the consumption of the economic
benefits of the intangible asset are highly correlated or when the intangible asset is expressed as a
measure of revenue.
These amendments to the standards are either irrelevant or will not have any material effect on the
consolidated financial statements.
c

Annual Improvements 2010-2012 and 2011-2013 cycles (most amendments will apply prospectively for
annual period beginning on or after 01 July 2014). The new cycle of improvements contains amendments
to the following standards:
IFRS 2

117

Share-Based Payment; IFRS 2 has been amended to clarify the definition of vesting condition
by separately defining performance condition and service condition. The amendment also clarifies
both: how to distinguish between a market condition and a non-market performance condition and
the basis on which a performance condition can be differentiated from a vesting condition.

Annual Report/2014

IFRS 3

IFRS 8

Business Combinations; These amendments clarify the classification and measurement of


contingent consideration in a business combination. Further, IFRS 3 has also been amended
to clarify that the standard does not apply to the accounting for the formation of all types of joint
arrangements including joint operations in the financial statements of the joint arrangement
themselves.
Operating Segments has been amended to explicitly require the disclosure of judgments
made by management in applying the aggregation criteria. In addition, this amendment clarifies
that a reconciliation of the total of the reportable segments assets to the entity assets is required
only if this information is regularly provided to the entitys chief operating decision maker. This
change aligns the disclosure requirements with those for segment liabilities.

Amendments to IAS 16 Property, plant and equipment and IAS 38 Intangible assets. The amendments
clarify the requirements of the revaluation model in IAS 16 and IAS 38, recognizing that the restatement
of accumulated depreciation (amortization) is not always proportionate to the change in the gross carrying
amount of the asset.
IAS 24

Related Party Disclosure. The definition of related party is extended to include a management
entity that provides key management personnel services to the reporting entity, either directly
or through a group entity.

IAS 40

Investment Property. IAS 40 has been amended to clarify that an entity should: assess
whether an acquired property is an investment property under IAS 40 and perform a separate
assessment under IFRS 3 to determine whether the acquisition of the investment property
constitutes a business combination.

These amendments/clarification are not likely to have any material impact on the consolidated financial
statements.
d

New Standards issued by IASB and notified by SECP but not yet effective
Following new standards issued by IASB have been adopted by the Securities and Exchange Commission
of Pakistan for the purpose of applicability in Pakistan through SRO 633(1)/2014 dated July 10, 2014 and will
be effective for annual periods beginning on or after January 01, 2015.
IFRS 10

Consolidated Financial Statements


This is a new standard that replaces the consolidation requirements in SIC - 12 Consolidation:
Special Purpose Entities and IAS 27 - Consolidated and Separate Financial Statements. The
proposed standard builds on existing principles by identifying the concept of control as the
determining factor in whether an entity should be included within the consolidated financial
statements of the parent company and provides additional guidance to assist in the determination
of control where this is difficult to assess.

IFRS 11

Joint Arrangements
This is a new standard that deals with the accounting for joint arrangements and focuses on
the rights and obligations of the arrangements, rather than its legal form. Standard requires a
single method for accounting for interests in jointly controlled entities.

IFRS 12

Disclosure of Interest in Other Entities


This is a new and comprehensive standard on disclosure requirements for all forms of interests
in other entities including joint arrangements, associates, special purpose vehicles and other
off balance sheet vehicles.

Annual Report/2014

118

IFRS 13

Fair V

alue Measurement

This standard applies to IFRSs that require or permit fair value measurement or disclosures
and provides a single IFRS framework for measuring fair value and requires disclosures about
fair value measurement. The standard defines fair value on the basis of an 'exit-price' notion
and uses 'a fair value hierarchy', which results in market-based, rather than entity-specific
measurement.
These new standards are either irrelevant or will not have any material effect on the consolidated financial
statements.
3.

SIGNIFICANT ACCOUNTING POLICIES


3.1

Foreign currency transactions and translation


All monetary assets and liabilities denominated in foreign currencies are translated into Pak Rupees at the rates
of exchange prevailing at the balance sheet date or as fixed under contractual arrangements.
All non-monetary items are translated into Pak Rupees at the rates on date of transaction or on the date when
fair values are determined.
Transactions in foreign currencies are translated into Pak Rupees at exchange rate prevailing at the date of
transaction or as fixed under contractual arrangement.
Foreign exchange gains and losses on translation are recognized in the profit and loss account.
For the purposes of consolidation, income and expense items of the foreign subsidiaries are translated at annual
average exchange rate. All monetary and non monetary assets and liabilities are translated at the exchange
rate prevailing at the balance sheet date except for share capital which is translated at historical rate. Exchange
differences arising on the translation of foreign subsidiaries are recognized under translation reserve in
Consolidated reserves until the disposal of interest in such subsidiaries.

3.2

Staff retirement benefits


Defined benefit plan
The Group operates unfunded gratuity schemes for all its eligible employees who are not part of the provident
fund scheme. Benefits under the scheme are payable to employees on completion of the prescribed qualifying
period of service under the scheme. Actuarial valuation is conducted periodically using the "Projected Unit
Credit Method" and the latest valuation was carried out as at June 30, 2014. The results of valuation are
summarized in note no. 9.
Actuarial gains and losses arising at each valuation date are recognized immediately in other comprehensive
income.
Benefits under the scheme are payable to employees on completion of the prescribed qualifying period of
service under the scheme.
Defined contribution plan
The Holding Company operates a recognized provident fund scheme for its eligible employees to which equal
monthly contribution is made by the Group and the employees at the rate of 8.33% of the basic salary.

119

Annual Report/2014

3.3

Accumulated employee compensated absences


The Group provides for compensated absences for all eligible employees in the period in which these are
earned in accordance with the rules of the Group.

3.4

Provisions
Provisions are recognized when the Group has present obligation (legal or constructive) as a result of past
event and it is probable that an outflow of resources embodying economic benefits will be required to settle
the obligation and a reliable estimate can be made of the amount of the obligation.
Provisions are reviewed at each balance sheet date and adjusted to reflect current best estimate.

3.5

T axation
Current
Provision for current tax is based on the taxable income for the year determined in accordance with the prevailing
law for taxation of income and decisions taken by the Taxation Authorities. The charge for current tax is calculated
using prevailing tax rates or tax rates expected to apply to the profit for the year. The charge for current tax
also includes adjustments, where considered necessary, to provision for taxation made in previous years arising
from assessments framed during the year for such years. The Group takes into account the current Income
Tax law and decisions taken by the Taxation Authorities.
Deferred
Deferred tax is accounted for using the balance sheet liability method in respect of all temporary
differences arising from differences between the carrying amount of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities
are recognized for all taxable temporary differences and deferred tax assets are recognized to the extent that
it is probable that taxable profits will be available against which the deductible temporary differences, unused
tax losses and tax credits can be utilized. Deferred tax assets are reduced to the extent that it is no longer
probable that the related tax benefit will be realized.
Deferred tax is calculated at the rates that are expected to apply to the period when the differences reverse,
based on tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax
is charged or credited in the profit and loss account, except that it relates to items recognized in other
comprehensive income or directly in equity. In this case tax is also recognized in other comprehensive income
or directly in equity, respectively.

3.6

Borrowings
Borrowings are recorded at the amount of proceeds received.

3.7

Borrowing cost
Borrowing costs are recognized as an expense in the period in which these are incurred except to the extent
of borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying
asset. Such borrowing costs are capitalized as part of the cost of that asset up to the date of its commissioning.

3.8

T rade and other payables


Liabilities for trade and other payables are carried at cost which is the fair value of the consideration to be paid
in the future for goods and services received.

3.9

Property, plant and equipment


Operating fixed assets
Operating fixed assets are stated at cost less accumulated depreciation and any identified impairment loss
except leasehold land which is stated at cost.

Annual Report/2014

120

Depreciation is charged on reducing balance method and straight line method on class of items at rates specified
in the note no. 14.1. Depreciation is charged on additions on monthly basis i.e. from the month in which it is
capitalized till the month of its disposal. Depreciation is charged on the assets even if the assets are idle.
Subsequent costs are included in the assets carrying amount or recognized as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Group and
the cost of the item can be measured reliably. All other repair and maintenance costs are charged to profit
and loss account during the period in which they are incurred.
The costs of replacing part of an item of property, plant and equipment is recognized in the carrying amount
of the item if it is probable that the future economic benefits associated with the part will flow to the Group and
its cost can be measured reliably.
The costs of day-to-day servicing of property, plant and equipment are recognized in profit or loss as incurred.
Gains and losses on disposal of operating assets are included in profit and loss account.
Capital work-in-progress
Capital work-in-progress is stated at cost accumulated up to the balance sheet date less impairment, if any.
Cost represents expenditure incurred on property, plant and equipment in the course of construction, acquisition,
installation, development and implementation. These expenditures are transferred to relevant category of
property, plant and equipment as and when the assets start operation.
3.10

Intangible assets
Intangible assets are stated at cost less accumulated amortization and impairment, if any. Amortization is charged
over the useful life of the assets on a systematic basis to income by applying the straight line method at the rate
specified in note no. 15.
Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset's
carrying amount exceeds its recoverable amount. The recoverable amount is higher of an assets' fair value less
costs to sell and value in use.

3.11

Loans and receivables


Financial assets which have fixed or determinable payments and are not quoted in an active market are classified
as loans and receivables. These are measured at amortized cost less impairment, if any.

3.12

Stores, spare parts and loose tools


Stores, spare parts and loose tools are stated at moving average cost less provision for slow moving/obsolete
items. Goods-in-transit are valued at invoice/purchase amount plus other costs incurred thereon up to balance
sheet date.

3.13

Stock-in-trade
Stock of raw materials, except for those in transit, work-in-process and finished goods are valued at lower of
weighted average cost and net realizable value. Waste products are valued at net realizable value. Cost of raw
materials and trading stock comprises of the invoice value plus other charges incurred thereon. Cost of workin-process and finished goods includes cost of direct materials, labor and appropriate portion of manufacturing
overheads. Items in transit are stated at cost comprising invoice value and other incidental charges incurred
thereon up to the balance sheet date.
Net realizable value signifies the estimated selling prices in the ordinary course of business less costs necessarily
to be incurred in order to make the sale.

121

Annual Report/2014

3.14

T rade debts
Trade debts are carried at original invoice amount except export receivables. Export trade debts are translated
into Park Rupees at the rates ruling on the balance sheet date or as fixed under contractual arrangements.

Debts
considered irrecoverable are written off and provision is made for debts considered doubtful.
3.15

Revenue recognition
Revenue is recognized to the extent it is probable that the economic benefits will flow to the Group and the
revenue can be measured reliably. Revenue is measured at the fair value of the consideration received or
receivable and is recognized on following basis:
-

Sale is recognized when the goods are dispatched to the customer and in case of export when the goods
are shipped. Revenue from sale of goods is measured at the fair value of consideration received or
receivable, net of returns and trade discounts.

Profit on deposits with banks is recognized on time proportion basis taking into account the amount
outstanding and rates applicable thereon.
Duty draw back on export sales is recognized on an accrual basis at the time of export sale.
Processing charges are recorded when processed goods are delivered to customers and invoices raised.
Dividend income is recognized when the Group's right to receive the payment is established.
Interest on loans and advances to employees is recognized on receipt basis.

3.16

Financial Instruments
Financial instruments carried on the balance sheet include investments, deposits, trade debts, loans and
advances, other receivables, cash and bank balances, long-term financing, liabilities against assets subject to
finance lease, short-term borrowings, accrued mark-up and trade and other payables etc. Financial assets and
liabilities are recognized when the Group becomes a party to the contractual provisions of instrument. Initial
recognition is made at fair value plus transaction costs directly attributable to acquisition, except for financial
instruments at fair value through profit or loss.

3.17

Derecognition
Financial assets are derecognized when the Group looses control of the contractual rights that comprise
the financial asset. The Group looses such control if it realizes the rights to benefits specified in contract,
the rights expire or the Group surrenders those rights. Financial liabilities are derecognized when the
obligation specified in the contract is discharged, cancelled or expired. Any gain or loss on subsequent
measurement (except available for sale investments) and derecognition is charged to the profit or loss currently.

3.18

Impairment
Financial assets
A financial asset is assessed at each reporting date to determine whether there is any objective evidence that
it is impaired. A financial asset is considered to be impaired if objective evidence indicated that one or more
events have had a negative effect on the estimated future cash flows of that asset.
The Group considers evidence of impairment for receivable and other financial assets at specific asset level.
Impairment losses are recognized as expense in profit and loss account. An impairment loss is reversed only
to the extent that the asset's carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortization, if no impairment loss had been recognized.
Non-Financial assets
The carrying amount of non-financial assets is assessed at each reporting date to determine whether there is
any indication of impairment. If any such indication exists then the assets recoverable amount of such assets
is estimated. Recoverable amount is higher of an asset's fair value less cost to sell and value in use. An
impairment loss is recognized as expense in the profit and loss account for the amount by which asset's
carrying amount exceeds its recoverable amount.

Annual Report/2014

122

3.19

Derivative financial instruments


The Group uses derivative financial instruments to hedge its risks associated with interest and exchange
rate fluctuations. Derivative financial instruments are carried as assets when fair value is positive and as liabilities
when fair value is negative. Any change in the fair value of the derivative financial instruments is taken to the
profit and loss account.

3.20

Offsetting of financial assets and liabilities


All financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if the
Group has a legal enforceable right to set off the recognized amounts and intends either to settle on net
basis or to realize the assets and settle the liabilities simultaneously.

3.21

Cash and cash equivalents


The cash and cash equivalents comprises cash and cheques in hand and balances with banks on current,
savings and deposit accounts less short-term borrowings.

3.22

Dividend and appropriation to reserves


Final dividend distributions to the Group's shareholders are recognised as a liability in the financial statements
in the period in which the dividends are approved by the Group's shareholders at the Annual General Meeting,
while the interim dividend distributions are recognized in the period in which the dividends are declared by the
Board of Directors. Appropriations of profit are reflected in the statement of changes in equity in the period in
which such appropriations are approved.

3.23

Segment reporting
Segment reporting is based on the operating (business) segments of the Group. An operating segment is
a component of the Group that engages in business activities from which it may earn revenues and incur
expenses including revenues and expenses that relates to transactions with any of the Group's other
components. An operating segments operating results are reviewed regularly by the Chief Executive Officer
(CEO) to make decisions about resources to be allocated to the segment and assess its performance and for
which discrete financial information is available.
Segment results that are reported to the CEO include items directly attributable to a segment as well as those
that can be allocated on a reasonable basis. Unallocated items comprise mainly administrative and other
operating expenses and income tax assets and liabilities. Segment capital expenditure is the total cost incurred
during the period to acquire property, plant and equipment and intangible assets other than goodwill.

CHANGE IN ACCOUNTING POLICY


The revised IAS 19 "Employees Benefits" (Revised) have become effective for the Holding Company's financial statements
for the year ended June 30, 2014. The amendments to IAS 19 changes the accounting for Defined Benefit Plan and
termination benefits. The significant changes are as follows:
Recognition
a

Actuarial gains and losses


The amendments require all remeasurement gains and losses (actuarial gains and losses) to be fully recognized
immediately through other comprehensive income. Previously, the Holding Companys fully recognized actuarial
gains and losses in the profit and loss account as allowed under the relevant provision of IAS 19.

Past service cost


Past service cost (either vested or non vested) is recognized in the profit and loss account as soon as the
change in the benefit plans are made. Previously, this was also recognized in the profit and loss account
as allowed by the relevant provision of the AS 19.

123

Annual Report/2014

Presentation of Changes in Defined Benefit Obligation and Plan Assets


Presentation of changes in defined benefit obligation will be split into following components in our case:
i

Service cost
Recognized in profit and loss account and includes current and past service cost as well as gains or losses
on settlements.

Ii

Re-measurement
Recognized in other comprehensive income and comprises actuarial gains and losses on the defined benefit
obligation.

Revised Accounting Policy of Staff Retirement Benefits - Defined Benefit Plans


The application of revised IAS 19 requires the change in Group's accounting policy in respect of actuarial gains
and losses to be accounted for retrospectively in accordance with International Accounting Standard 8
Accounting Policies, Changes in Accounting Estimates and Errors by reclassifying the figures of actuarial gains
and losses to other comprehensive income from profit and loss account and hence comparative figures of profit
and loss and other comprehensive income have been restated.
Effect of Change in Accounting Policy
Effect of retrospective application of change in Accounting policy are as follows:
Amounts as
previously
stated

Amounts
as
re-stated

Rs. 000s

Effect on Profit & Loss Account for


the year ended June 30, 2013
Cost of sales
Taxation
Net profit before tax

Effect of
restatement

25,689,344
139,719
698,804

(10,409)
1,424
8,985

25,678,935
141,143
707,789

Effect on Other Comprehensive Income


Remeasurement loss on defined benefit obligation
Impact of tax

Effect on Comparative Basic and Diluted EPS


Basic and Diluted EPS - Rupees per share

4.82

(10,409)
1,424
(8,985)

(10,409)
1,424
(8,985)

0.06

4.88

Further comparative EPS is also restated due to effect of issuance of bonus shares during the year as disclosed
in note no. 32.
Effect On Balance Sheet
The change in accounting policy has no effect on the balance sheet since the actuarial gains/losses were
already recorded through profit and loss account, therefore, third balance sheet presentation is not applicable.

Annual Report/2014

124

2014
5

SHARE CAPIT AL

5.1

Authorized capital
2014

2013
Rs. 000s

2013

Number of Shares
400,000,000

5.2

200,000,000

Ordinary shares of Rs.10 each

4,000,000

2,000,000

641,890

641,890

54,473

54,473

1,131,819

827,123

1,828,182

1,523,486

Issued, subscribed and paid-up capital


2014
2013
Number of Shares
64,188,985

64,188,985

5,447,326

5,447,326

113,181,907

82,712,204

182,818,218

152,348,515

Ordinary shares of Rs.10 each allotted


for consideration fully paid in cash
Ordinary shares of Rs.10 allotted as fully
paid under scheme of arrangement
for amalgamation
Ordinary shares of Rs.10 each allotted
as fully paid bonus shares

5.2.1

During the year certain major shareholders of the Holding Company transferred their shares in one direction for group
formation to Gul Ahmed Holdings (Private) Limited (GAHPL); a company established and beneficially owned by
these transferors. Consequently, GAHPL now owns 67.45% shares of the Holding Company and has become the
ultimate parent of the Group.

5.2.2

As at June 30, 2014, 129,001,910 (2013: 107,457,082) ordinary shares of Rs.10 each are held by related parties.
2014
Note

5.2.3

152,348,515
30,469,703
182,818,218

RESER VES

6.1
Exchange difference on translation of foreign subsidiaries
Statutory reserve

3,180,000
400,000
3,580,000
96,902
11,901
3,688,803

3,430,000
(250,000)
3,180,000
78,156
10,355
3,268,511

598,511
2,335,434

646,103
2,070,834

2,933,945
(694,706)
2,239,239

2,716,937
(561,938)
2,154,999

This represents appropriation of profit in past years to meet future exigencies.

LONG TERM FINANCING - SECURED


From Banking Companies
Related party
Other banks
Current portion shown under current liabilities

125

126,957,096
25,391,419
152,348,515

Rs. 000s

Revenue reserve
General reserve - opening
Transfer from/(to) unappropriated profit

6.1

(Number of Shares)

Reconciliation of the number of shares outstanding


Number of shares outstanding at the beginning of the year
Add: 20% Issue of bonus shares
Add: 20% Issue of right shares

6.

2013

7.1
7.2

Annual Report/2014

Particulars

7.1

Note

Number of
installments and
commencement
month

Installment
amount
Rs. 000s

Mark-up rate
per annum

2013
Rs. 000s

Related party

Habib Metropolitan Bank Limited Loan 1


a) Under LTF-EOP scheme

7.4, 7.6, 7.7

b) Under LTF-EOP scheme

12 half yearly
March-2010
12 half yearly
April-2010

684

7.00% p.a.
payable quarterly

2,047

3,414

2,042

7.00% p.a.
payable quarterly

6,123

10,206

19,417

7.00% p.a.
payable quarterly

77,665

116,498

Habib Metropolitan Bank Limited Loan 2


Under LTF-EOP scheme

7.4, 7.6, 7.7

12 half yearly
November-2010

Habib Metropolitan Bank Limited Loan 3


Under LTFF scheme

7.4, 7.6, 7.8

16 half yearly
February-2012

2,719

10.00% p.a.
payable quarterly

29,900

35,338

Habib Metropolitan Bank Limited Loan 4


Under LTFF scheme

7.4, 7.6, 7.8

16 half yearly
March-2012

2,504

10.00% p.a.
payable quarterly

27,545

32,553

Habib Metropolitan Bank Limited Loan 5


Under LTFF scheme

7.4, 7.6, 7.8

16 half yearly
June-2012

4,212

10.25% p.a.
payable quarterly

46,313

54,737

Habib Metropolitan Bank Limited Loan 6


Under LTFF scheme

7.4, 7.6, 7.8

16 half yearly
July-2012

1,804

10.25% p.a.
payable quarterly

21,644

25,252

Habib Metropolitan Bank Limited Loan 7


Under LTFF scheme

7.4, 7.6, 7.8

10 half yearly
December-2013

3,328

11.20% p.a.
payable quarterly

26,624

33,280

Habib Metropolitan Bank Limited Loan 8


Under LTFF scheme

7.4, 7.6, 7.8

10 half yearly
January-2014

970

12.70% p.a.
payable quarterly

8,721

9,691

Habib Metropolitan Bank Limited Loan 9


Under LTFF scheme

7.4, 7.6, 7.8

10 half yearly
February-2014

1,342

12.70% p.a.
payable quarterly

12,072

13,414

Habib Metropolitan Bank Limited Loan 10


Under LTFF scheme

7.4, 7.6, 7.8

10 half yearly
June-2014

9,618

12.70% p.a.
payable quarterly

86,562

96,180

Habib Metropolitan Bank Limited Loan 11


Under LTFF scheme

7.4, 7.6, 7.8

10 half yearly
August-2014

1,357

12.70% p.a.
payable quarterly

13,570

13,570

Habib Metropolitan Bank Limited Loan 12


Under LTFF scheme

7.4, 7.6, 7.8

10 half yearly
September-2014

3,392

12.70% p.a.
payable quarterly

33,920

33,920

Habib Metropolitan Bank Limited Loan 13


Under LTFF scheme

7.4, 7.6, 7.8

10 half yearly
October-2014

158

12.70% p.a.
payable quarterly

1,575

1,575

Habib Metropolitan Bank Limited Loan 14


Under LTFF scheme

7.4, 7.6, 7.8

10 half yearly
August-2015

2,959

11.40% p.a.
payable quarterly

29,590

29,590

Habib Metropolitan Bank Limited Loan 15


Under LTFF scheme

7.4, 7.6, 7.8

10 half yearly
September-2015

13,689

11.40% p.a.
payable quarterly

136,885

136,885

Habib Metropolitan Bank Limited Loan 16

7.4, 7.6, 7.8

10 half yearly
April-2016

3,776

11.40% p.a.
payable quarterly

37,755

598,511

646,103

Total due to Related Party


7.2

2014

Other banks
Allied Bank Limited Loan 2
Under LTFF scheme

7.5, 7.8

32 quarterly
July-2010

9,256

10.00% p.a.
payable quarterly

148,104

185,129

Bank Al-Habib Limited Loan 1


Under LTF-EOP scheme

7.4, 7.7

12 half yearly
December-2008

2,315

7.00% p.a.
payable quarterly

4,627

9,256

Bank Al-Habib Limited Loan 2


Under LTFF scheme

7.3, 7.4, 7.8

8 half yearly
December-2013

17,159

12.60% p.a.
payable quarterly

102,947

137,265

Bank Alfalah Limited Loan 1

7.4

9 half yearly
July-2014

1,147

Average six months


10,325
KIBOR Ask rate + 1.25%
payable half yearly

Bank Alfalah Limited Loan 2

7.4

9 half yearly
August-2014

1,472

Average six months


13,252
KIBOR Ask rate + 1.25%
payable half yearly

Annual Report/2014

126

Installment
amount
Rs. 000s

Mark-up rate
per annum

2014

2013

Average six months


KIBOR Ask rate + 1.25%
payable half yearly

73,547

Note

Bank Alfalah Limited Loan 3

7.4

9 half yearly
September-2014

Bank Alfalah Limited Loan 4

7.4

9 half yearly
October-2014

10,285

Average six months


92,567
KIBOR Ask rate + 1.25%
payable half yearly

Bank Alfalah Limited - Loan 5


Islamic Banking

7.4

09 half yearly
March-2014

9,439

Average six months


75,511
KIBOR Ask rate + 1.25%
payable half yearly

Bank Alfalah Limited - Loan 6


Islamic Banking

7.4

09 half yearly
April-2014

6,457

Average six months


51,662
KIBOR Ask rate + 1.25%
payable half yearly

Faysal Bank Limited Loan 1


Under LTFF scheme

7.4, 7.8

10 half Yearly
January-2014

6,720

12.70% p.a
payable quarterly

60,480

67,200

Faysal Bank Limited Loan 2


Under LTFF scheme

7.4, 7.8

10 half yearly
January-2014

3,850

12.70% p.a.
payable quarterly

34,650

38,500

Faysal Bank Limited Loan 3


Under LTFF scheme

7.4, 7.8

10 half yearly
April-2014

672

12.70% p.a.
payable quarterly

6,042

6,714

Faysal Bank Limited Loan 4


Under LTFF scheme

7.4, 7.8

10 half yearly
June-2014

241

12.70% p.a.
payable quarterly

2,169

2,410

Faysal Bank Limited Loan 5


Under LTFF scheme

7.4, 7.8

10 half yearly
July-2014

846

12.70% p.a.
payable quarterly

8,460

8,460

Faysal Bank Limited Loan 6


Under LTFF scheme

7.4, 7.8

10 half yearly
September-2014

10,970

12.70% p.a.
payable quarterly

109,700

109,700

Habib Bank Limited Loan 1


a) Under State Bank of Pakistan (SBP)
scheme of Long Term Finance Export Oriented Projects (LTF-EOP)

7.3, 7.7

12 half yearly
June-2010

5,416

7.00% p.a.
payable quarterly

16,245

28,097

12 half yearly
November-2010

4,450

7.00% p.a.
payable quarterly

17,803

26,703

b) Under LTF-EOP scheme

8,172

Rs. 000s

84,950

58,119

Habib Bank Limited Loan 2


Under LTF-EOP scheme

7.3, 7.7

12 half yearly
December-2010

2,571

7.00% p.a.
payable quarterly

10,284

15,426

Habib Bank Limited Loan 3


Under LTF-EOP scheme

7.3, 7.7

12 half yearly
February-2010

9,510

7.00% p.a.
payable quarterly

28,531

47,551

Habib Bank Limited Loan 4


Under LTF-EOP scheme

7.3, 7.7

12 half yearly
January-2010

778

7.00% p.a.
payable quarterly

2,332

3,888

Habib Bank Limited Loan 5


a) Under LTF-EOP scheme

7.3, 7.7

12 half yearly
January-2010

1,698

7.00% p.a.
payable quarterly

5,091

8,487

139

7.00% p.a.
payable quarterly

414

692

1 1,054

10.00% p.a.
payable quarterly

110,542

132,650

b) Under LTF-EOP scheme

12 half yearly
February-2010

Habib Bank Limited Loan 6


Under State Bank of Pakistan (SBP)
Scheme of Long Term Financing
Facility (LTFF)

7.3, 7.8

16 half yearly
July-2011

Habib Bank Limited Loan 7


Under LTFF scheme

7.3, 7.8

16 half yearly
August-2011

562

10.00% p.a.
payable quarterly

5,623

6,747

Habib Bank Limited Loan 8


Under LTFF scheme

7.3, 7.8

16 half yearly
October-2011

709

10.00% p.a.
payable quarterly

7,096

8,514

Habib Bank Limited Loan 9


Under LTFF scheme

7.3, 7.8

16 half yearly
March-2012

277

10.00% p.a.
payable quarterly

3,045

3,599

Habib Bank Limited Loan 10


Under LTFF scheme

7.3, 7.8

16 half yearly
August-2012

3,536

10.25% p.a.
payable quarterly

42,470

49,542

HSBC Bank Middle East Limited Loan 1


a) Under LTF-EOP scheme

7.4, 7.7

12 half yearly
October-2010

2,883

7.00% p.a.
payable quarterly

11,534

17,300

7.00% p.a.
payable quarterly

4,149

6,225

b) Under LTF-EOP scheme

127

Number of
installments and
commencement
month

Particulars

12 half yearly
November-2010

1,038

Annual Report/2014

Particulars

Note

Number of
installments and
commencement
month

Installment
amount
Rs. 000s

Mark-up rate
per annum

2014

2013

1,838

7.00% p.a.
payable quarterly

7,353

11,030

Rs. 000s

HSBC Bank Middle East Limited Loan 2


Under LTF-EOP scheme

7.4, 7.7

12 half yearly
December-2010

HSBC Bank Middle East Limited Loan 3


Under LTF-EOP scheme

7.4, 7.7

12 half yearly
February-2010

875

7.00% p.a.
payable quarterly

2,623

4,373

HSBC Bank Middle East Limited Loan 4


Under LTF-EOP scheme

7.4, 7.7

12 half yearly
March-2010

844

7.00% p.a.
payable quarterly

2,532

4,220

Meezan Bank Limited Loan 1


Diminishing Musharaka

7.5

6 half yearly
February-2011

15,266

Average six months


KIBOR Ask rate + 1.00%
payable half yearly

15,266

Meezan Bank Limited Loan 2


Diminishing Musharaka

7.5

6 half yearly
June-2011

1,449

Average six months


KIBOR Ask rate + 1.50%
payable half yearly

1,449

Meezan Bank Limited Loan 3


Diminishing Musharaka

7.5

6 half yearly
July-2011

5,253

Average six months


KIBOR Ask rate + 1.50%
payable half yearly

National Bank of Pakistan Loan 1

7.5

25 quarterly
September-2009

4,000

Average three months


KIBOR Ask rate + 1.00%
payable quarterly

20,000

36,000

National Bank of Pakistan Loan 2


Under LTFF scheme

7.4, 7.5, 7.8

16 quarterly
September-2011

2,351

10.40% p.a.
payable quarterly

11,755

21,159

National Bank Of Pakistan Loan 3

7.4, 7.5, 7.8

20 quarterly
January-2014

3,190

10.90% p.a.
payable quarterly

57,420

National Bank Of Pakistan Loan 4

7.4, 7.5, 7.8

20 quarterly
May-2014

10.90% p.a.
payable quarterly

15,219

National Bank Of Pakistan Loan 5

7.4, 7.5, 7.8

20 quarterly
April-2014

6,009

10.90% p.a.
payable quarterly

114,171

NIB Bank Limited Loan 1


Under LTFF scheme

7.5, 7.8

16 quarterly
June-2010

2,839

9.00% p.a.
payable quarterly

8,510

NIB Bank Limited Loan 2


Under LTFF scheme

7.5, 7.8

16 quarterly
September-2010

1,883

9.00% p.a.
payable quarterly

7,529

NIB Bank Limited Loan 3


Under LTFF scheme

7.5, 7.8

16 quarterly
June-2014

2,827

10.90% p.a.
payable quarterly

42,407

45,234

NIB Bank Limited Loan 4


Under LTFF scheme

7.5, 7.8

16 quarterly
March-2014

829

10.90% p.a.
payable quarterly

11,607

13,265

NIB Bank Limited Loan 5


Under LTFF scheme

7.5, 7.8

16 quarterly
August-2014

498

10.90% p.a.
payable quarterly

7,960

7,960

NIB Bank Limited Loan 6

7.5, 7.8

16 quarterly
March-2014

829

Average three months


KIBOR Ask rate + 1.50%
payable quarterly

NIB Bank Limited Loan 7

7.5, 7.8

16 quarterly
June-2014

2,827

Average three months


42,408
KIBOR Ask rate + 1.50%
payable quarterly

45,235

NIB Bank Limited Loan 8


Under LTFF scheme

7.5, 7.8

16 quarterly
September-2014

1,289

10.90% p.a.
payable quarterly

20,640

20,640

NIB Bank Limited Loan 9

7.5, 7.8

16 quarterly
November-2014

10.90% p.a.
payable quarterly

4,830

NIB Bank Limited Loan 10

7.5, 7.8

16 quarterly
February-2015

3,220

10.90% p.a.
payable quarterly

51,530

NIB Bank Limited Loan 11

7.5, 7.8

16 quarterly
March-2015

2,016

10.90% p.a.
payable quarterly

32,266

NIB Bank Limited Loan 12

7.5, 7.8

16 quarterly
April-2015

10.90% p.a.
payable quarterly

8,610

NIB Bank Limited Loan 13

7.5, 7.8

16 quarterly
May-2015

10.90% p.a.
payable quarterly

21,190

NIB Bank Limited Loan 14

7.5, 7.8

16 quarterly
June-2015

2,695

Annual Report/2014

801

301

538
1,324
168

Average three months


KIBOR Ask rate + 1.50%
payable quarterly

10,505

11,607

13,265

128

Particulars

Note

Number of
installments and
commencement
month

Installment
amount
Rs. 000s

2014

2013
Rs. 000s

10.90% p.a.
payable quarterly

32,605

803

10.90% p.a.
payable quarterly

12,850

2,995

11.10% p.a.
payable quarterly

11,980

17,970

8 Half Yearly
November-2012

21,886

11.10% p.a.
payable quarterly

87,557

131,329

NIB Bank Limited Loan 15

7.5, 7.8

16 quarterly
June-2015

NIB Bank Limited Loan 16

7.5, 7.8

16 quarterly
October-2015

Standard Chartered Bank Loan 1


Under LTFF scheme

7.5, 7.8

8 Half Yearly
October-2012

Standard Chartered Bank Loan 2


Under LTFF scheme

7.5, 7.8

2,037

Average three months


KIBOR Ask rate + 1.00%
payable half yearly

50,000

United Bank Limited Loan 1

7.5

10 half yearly
March-2009

50,000

United Bank Limited Loan 2


Under LTF-EOP scheme

7.5, 7.7

12 half yearly
April-2010

931

7.00% p.a.
payable quarterly

2,793

4,655

United Bank Limited Loan 3


Under LTFF scheme

7.5, 7.8

16 half yearly
November-2010

363

10.00% p.a.
payable quarterly

2,902

3,628

United Bank Limited Loan 4

7.5

United Bank Limited Loan 5


Under LTFF scheme

7.5, 7.8

10 half yearly
December-2012

1,319

10.50% p.a.
payable quarterly

7,915

10,553

United Bank Limited Loan 6


Under LTFF scheme

7.5, 7.8

12 half yearly
December-2011

557

10.50% p.a.
payable quarterly

3,348

4,462

United Bank Limited Loan 7


Under LTFF scheme

7.5, 7.8

12 half yearly
January-2012

128

10.50% p.a.
payable quarterly

900

1,156

United Bank Limited Loan 8


Under LTFF scheme

7.5, 7.8

12 half yearly
February-2012

741

10.50% p.a.
payable quarterly

5,190

6,672

United Bank Limited Loan 9


Under LTFF scheme

7.5, 7.8

12 half yearly
April-2012

3,686

1 1.20% p.a.
payable quarterly

25,800

33,172

United Bank Limited Loan 10


Under LTFF scheme

7.5, 7.8

19 half yearly
November-2011

7,441

1 1.20% p.a.
payable quarterly

96,739

111,621

United Bank Limited Loan 11


Under LTFF scheme

7.5, 7.8

19 half yearly
December-2011

5,916

11.20% p.a.
payable quarterly

76,905

88,737

United Bank Limited Loan 12

7.5

12 half yearly
September-2013

United Bank Limited Loan 13

7.5

United Bank Limited Loan 14

7.5

United Bank Limited Loan 15


Under LTFF scheme

7.5, 7.8

12 half yearly
January-2014

United Bank Limited Loan 16


Under LTFF scheme

7.5, 7.8

United Bank Limited Loan 17

7.5

Samba Bank Limited Loan 1


Samba Bank Limited Loan 2

6 half yearly
March-2011

25,000

Average six months


KIBOR Ask rate + 1.25%
payable half yearly

25,000

269

Average six months


KIBOR Ask rate + 1.00%
payable half yearly

2,687

3,225

12 half yearly
October-2013

1,235

Average six months


KIBOR Ask rate + 1.00%
payable half yearly

12,353

14,823

12 half yearly
December-2013

5,892

Average six months


KIBOR Ask rate + 1.00%
payable half yearly

58,916

70,700

259

12.70% p.a.
payable quarterly

2,856

3,115

12 half yearly
March-2014

1,525

1 1.20% p.a.
payable quarterly

16,776

18,302

12 half yearly
January-2014

1 1,913

7.5,7.8

9 half yearly
May-2015

17,245

10.90% p.a.
payable quarterly

155,200

7.5,7.8

9 half yearly
June-2015

4,456

10.90% p.a.
payable quarterly

40,100

Total from other banks

129

Mark-up rate
per annum

Average six months


KIBOR Ask rate + 1.00%
payable half yearly

131,037

2,335,434

142,950

2,070,834

Annual Report/2014

7.3

These loans are secured by first pari passu charge over present and future property, plant and equipment of the Company
and equitable mortgage over land and building.

7.4

These loans are secured by charge over specified machinery .

7.5

These loans are secured by way of pari passu charge over the pro perty, plant and equipment of the Company.

7.6

Habib Metropolitan Bank Limited is a related party - Associated Company.

7.7

Grace period of one year in payment of principal outstanding under LTF-EOP facilities was allowed by the banks as per
State Bank of Pakistan SMEFD Circular No. 01 dated January 22, 2009.

7.8

The financing availed under the facility shall be repayable within a maximum period of ten years including maximum
grace period of two years of the date when financing was availed. However, where financing facilities have been provided
for a period of upto five years maximum grace period shall not exceed one year as per State Bank of Pakistan MFD
Circular No. 07 dated December 31, 2007.
2014

DEFERRED T AXATION - NET

2013
Rs. 000s
Re-stated

Opening
Charged to profit and loss account
Charged to other comprehensive income

326,526
12,923
(513)
338,936

284,467
43,483
(1,424)
326,526

371,552
8,221
379,773

349,378
10,498
359,876

(5,185)
(22,094)
(11,860)
(1,698)
(40,837)
338,936

(4,604)
(18,832)
(9,914)
(33,350)
326,526

40,303

27,952

26,382
2,380
28,762
3,910
(28,159)
44,816

14,285
2,867
17,152
10,409
(15,210)
40,303

Deferred tax arises due to:


Taxable temporary differences in respect of
Accelerated tax depreciation allowance
Provision for income of subsidiaries
Deductible temporary differences in respect of
Provision for gratuity
Provision for doubtful debts
Provision for slow moving items
Unused tax losses

ST AFF RETIREMENT BENEFITS


9.1 Reconciliation of the present value of
defined benefit obligation/movement in liability
Opening balance
Charge for the year
Current service cost
Interest cost
Remeasurement loss chargable in other comprehensive income
Benefits paid during the year
Closing balance

Annual Report/2014

130

2014

2013

9.2 Significant actuarial assumptions used


Following significant actuarial assumptions were
used for the valuation:
Discount rate used
Expected increase in salary for year end obligation
Average expected remaining working lifetime of
employees

13.25 % p.a
12.25 % p.a

10.5 % p.a
9.5 % p.a

8 years

10 years

9.3 General description


The scheme provides retirement benefits to permanent employees who have attained the minimum qualifying
period. Actuarial valuation of the scheme is carried out periodically and latest actuarial valuation was carried out
at 30 June 2014. The disclosure is based on information included in that actuarial report.
9.4 Sensitivity analysis
Year end sensitivity analysis (+- 100 bps) on Defined Benefit Obligation as presented by actuary in the report.
2014
Rs. 000s
Discount Rate + 100 bps
Discount Rate - 100 bps
Salary increase + 100 bps
Salary increase - 100 bps

36,571
43,028
43,152
36,409

The average duration of the defined benefit obligation is 8 years.


2014
Note
10

Rs. 000s

TRADE AND OTHER PAYABLES


Creditors

- Due to related parties


- Others

Murabaha
Accrued expenses
Advance from customers
Payable to employees' provident fund
Workers' profit participation fund
Workers' welfare fund
Unclaimed dividend
Taxes withheld
Others

10.1

131

2013

10.1
10.2

10.3
10.4

11,284
4,793,637
4,804,921
358,202
811,713
254,774
9,016
84,102
53,634
512
35,351
16,195
6,428,420

11,389
2,920,267
2,931,656
507,569
581,130
101,131
7,712
45,224
40,289
512
16,071
16,719
4,248,013

Murabaha is secured by pari passu hypothecation charge over stores and spares, stock-in-trade, trade debts
and other receivables. Unavailed murabaha facility at the year end was Rs.150 million (2013: Rs. Nil). Murabaha
facilities mature within 12 months. It includes accrued profit of Rs. 8.202 million (2013: Rs. 7.569 million). The
effective rate of profit ranges from 9.15% to 11.28% and is payable on maturity.

Annual Report/2014

10.2

Accrued expenses include infrastructure cess amounting to Rs. 72.48 million (2013: Rs. 34.962 million). The
Holding Company along with other petitioners have challenged the imposition of Infrastructure Cess by the
relevant Excise and Taxation Officer, Karachi. However, in view of the uncertainties in such matters, full provision
has been made in the financial statements.
2014
2013
Note

Rs. 000s

10.3 Workers' profit participation fund


Opening balance
Allocation for the year
Interest for the year

10.3.1

Payments made during the year


Closing balance

45,224
80,340
3,762
129,326
(45,224)
84,102

8,884
45,224
54,108
(8,884)
45,224

10.3.1 The Holding Company retains Workers Profit Participation Fund for its business operations till the date of allocation
to the workers. Interest is payable at prescribed rate under Companies Profit (Workers Participation) Act,1968
on funds utilized by the Holding Company till the date of allocation to workers.
10.4

The Holding Company along with other petitioners have challenged the constitutionality of the amendments
brought into Workers Welfare Fund Ordinance, 1971 through Finance Acts of 2006 and 2008. The Honorable
Sindh High Court has given the decision in favor of the Government. The Holding Company has filed an appeal
in the Supreme Court of Pakistan against the above decision. However, in view of the uncertainties in such
matters, full provision has been made in the financial statements.
2014

2013
Rs. 000s

11

ACCRUED MARK-UP/PROFIT
Mark-up on long term financing
Mark-up/profit on short term borrowings

11.1

75,169
101,995
177,164

64,145
127,647
191,792

Accrued markup includes Rs. 1.92 million ( 2013: Rs. 0.60 million) in respect of short term finance and Rs. 16.70
million (2013: Rs. 17.34 million) in respect of long term finance due to related party - Habib Metropolitan Bank
Limited (Associated Company).
2014
Note

12

2013
Rs. 000s

SHORT TERM BORROWINGS - SECURED


Short term bank borrowings
Foreign currency
Local currency
12.1
Short term running finance

5,212,442
2,510,700
7,723,142
106,628
7,829,770

3,209,532
4,799,945
8,009,477
280,939
8,290,416

12.1 Short term borrowing includes Istisna Rs. 580 million (2013: Rs. 1,125 million) in local currency and Rs. 1,959
million (2013: Rs. 218 million) in foreign currency.

Annual Report/2014

132

13

12.2

Short term borrowings are secured by pari passu hypothecation charge over stores and spares, stock-in-trade,
trade debts, other receivables and pledge over cotton. Unavailed facility at the year end was Rs. 6,162 million
(2013: Rs. 3,560 million). The facility for short term finance mature within twelve months. Short term borrowings
include Rs. 614 million (2013: Rs. 592 million) from related party - Habib Metropolitan Bank Limited (Associated
Company).

12.3

Mark-up/profit rates on foreign currency borrowings range from 0.84% to 3.75% (2013: 0.80% to 3.75%) per
annum. Local currency mark-up/profit rates range from 8.95% to 13.38% (2013: 8.95% to 14.98%) per annum.

CONTINGENCIES AND COMMITMENTS


13.1

The Holding Company owns and possesses a plot of land measuring 44 acres in Deh Khanto which is appearing
in the books at a cost of Rs. 64 million. The Holding Company holds title deeds of the land which are duly
registered in its name. Ownership of the land has been challenged in the Sindh High Court by some claimants
who claim to be the owners as this land was previously sold to them and subsequently resold to the Holding
Company. The claim of the alleged owners is fictitious. The Holding Company is confident that its title to the
land is secure and accordingly no provision in this behalf has been made in these consolidated financial statements.

13.2

The Holding Company has filed a suit in the Honorable Sindh High Court for recovery of Rs. 33.409 million (2013:
Rs. 33.409 million) against sale of property included in other receivables note no. 21.1. The Groups management
and its legal counsel are of the opinion that the case will be decided in the Holding Company's favor and
as such no provision has been made there against.

13.3

The Holding Company has filed a Petition in the Honorable Sindh High Court against order passed by the Board
of Trustees, Employees' Old-Age Benefits Institution (EOBI) for upholding the unjustified additional demand of
payment raised by EOBI for accounting years 2000-01 and 2001-02 amounting to Rs.50.827 million (2013:
Rs. 50.827 million). This demand had been raised after lapse of more than two years although the records and
books of the Holding Company were verified by the EOBI to their entire satisfaction and finalization of all matters
by EOBI. The Honorable Sindh High Court has already restrained EOBI from taking any action or proceedings
against the Holding Company. No provision has been made there against in these consolidated financial statements
as the Group is confident of the favorable outcome of the Petition.

13.4

The Holding Company has filed a Constitution Petition in the Honorable Sindh High Court against the City District
Government of Karachi for striking down the unjustified demand of payment of Ground Rent of Rs.10 million and
against which part payment of Rs. 2.57 million has been made. The Honorable Sindh High Court has already
restrained the City District Government of Karachi from taking any coercive action against the Holding Company.
No provision has been made there against in these consolidated financial statements as the Group is confident
of the favorable outcome of the Petition. Also refer note no. 20.1.

13.5

The Government of Pakistan increased the Gas Infrastructure Development Cess (GIDC) from Rs. 13 per MMBTU
to Rs.100 per MMBTU with effect from July 2012. This was subsequently reduced by the Government to Rs.50
per MMBTU from September 2012 and then again increased to Rs. 100 per MMBTU and it has been further
increased to Rs. 150 per MMBTU with effect from July 2014. The Holding Company along with several other
companies has filed a suit in the Honorable Sindh High Court challenging the increase in GIDC and the Honorable
Sindh High Court has issued stay against recovery of the enhanced GIDC and hence the Holding Company has
not paid the enhanced amount of GIDC. Further as the Group is confident that the case will be decided in favour
of the Appellants hence no provision in respect of the enhanced GIDC is made in these consolidated financial
statements which amounts to Rs. 344.210 million (2013: Rs. 145.972 million) as on the balance sheet date.
Similar petitions filed in the Peshawar and Islamabad High Courts have been decided in favor of the Appellants.
In the case of Islamabad High Court the matter is now with its division bench and decision of the Peshawar High
Court has been challenged by the Government in the Supreme Court of Pakistan. Subsequent to year end a
Three Member Bench of Honorable Supreme Court of Pakistan has declared the GIDC illegal and unconstitutional
vide its judgment dated August 22, 2014 and has accordingly suspended collection of GIDC and maintained the
order of the refund of GIDC so far collected.

133

Annual Report/2014

Considering these decisions and no subsequent actions on part of the Government against the decision of
Honorable Supreme Court, the Holding Company is confident that amount of the enhanced GIDC as stated above
will no more be payable and that the amount already paid at the original rate of Rs. 13 per MMBTU aggregating
to Rs. 105 million up to June 30, 2014 will be recovered so it has been reversed and reported in these consolidated
financial statements as GIDC refundable as reflected in note no. 22.1. Out of this total amount paid, the amount
of Rs.62.958 million paid and charged in preceding years is reported in other income as stated in note no. 30
whereas the amount of Rs. 42.293 million represents the amount paid in current year in respect of GIDC which
is not charged in current year in these consolidated financial statements.
13.6

The Holding Company has filed a suit in the Honorable Sindh High Court for recovery of Rs. 17.851 million
against a customer for the sale of fabric included in trade debts note no. 20. However, in view of the uncertainties
in such matters, full provision has been made in the consolidated financial statements.

13.7 Guarantees
(a) Rs. 636 million (2013: Rs. 332 million) against guarantees issued by banks which are secured by pari
passu hypothecation charge over stores and spares, stock-in-trade, trade debts and other receivables of
Holding Company. These guarantees includes guarantees issued by related party - Habib Metropolitan Bank
Limited amounting to Rs. 567.241 million (2013: Rs. 268.622 million).
(b) Post dated cheques Rs. 535 million (June-2013: Rs. 182 million) are issued to custom authorities in respect
of duties on imported items availed on the basis of consumption and export plans.
(c) Bills discounted Rs. 2,927 million (June-2013: Rs. 2,216 million).
(d) Corporate guarantee of Rs. 109.398 million (June-2013: Rs. 102.26 million) has been issued to bank by the
Holding Company in favor of indirect subsidiary company - GTM (Europe) Limited - UK.
13.8 Commitments
(a) The Group is committed for capital expenditure as at June 30, 2014 of Rs. 469 million (2013: Rs. 410 million).
(b) The Group is committed for non capital expenditure items under letters of credits as at June 30, 2014
of Rs. 2,221 million (2013: Rs. 579 million).
(c) The Group is committed to minimum rental payments for each of the following period, as follows:
2014
Note
Not more than one year
More than one year but not more than five years
More than five years

14

2013
Rs. 000s

323,120
1,242,552
730,377
2,296,049

262,090
994,498
600,930
1,857,518

7,720,611
497,296
8,217,907

6,918,925
225,313
7,144,238

PROPERTY , PLANT AND EQUIPMENT


Operating assets
Capital work in progress (CWIP)

Annual Report/2014

14.1
14.2

134

14.1 Operating Assets


Note Leasehold Buildings and
land
structures on
leasehold land

Plant and
machinery

Furniture
and
fixtures
Rs. 000s

Office
equipment

Vehicles

Total

Year ended June 30, 2014


Net carrying value basis
Opening net book value (NBV)
234,107
Direct additions (at Cost)
Transfer from CWIP
Disposal at NBV
14.1.2
(6,543)
Scrapped at NBV
Depreciation charge
14.1.1
-

992,286
23,082
106,514
(121,338)

5,242,962
88,330
1,242,091
(9,156)
(622,399)

227,564

1,000,544

5,941,828

Cost
Accumulated depreciation

227,564
-

2,245,825
(1,245,281)

11,889,117
(5,947,289)

Net book value

227,564

1,000,544

5,941,828

1,017,567
24,804
76,283
(5,299)
(121,069)

4,918,425
142,949
779,316
(51,279)
(546,449)

234,107

992,286

5,242,962

Cost
Accumulated depreciation

234,107
-

2,116,229
(1,123,943)

10,568,505
(5,325,543)

Net book value

234,107

992,286

5,242,962

58,567

146,910

244,093

10

10

10 to 12

15 to 30

20

Closing net book value

58,567 146,910
244,093
1,490
35,139
184,871
2,558
14,398
(1,914) (18,276)
(2,765)
(1,656)
(8,674) (34,223) (69,843)
51,176

158,654

340,845

6,918,925
332,912
1,365,561
(35,889)
(4,421)
(856,477)
7,720,611

Gross carrying value basis


as at June 30, 2014
106,691 430,658
658,475 15,558,330
(55,515) (272,004) (317,630) (7,837,719)
51,176

158,654

340,845

7,720,611

Year ended June 30, 2013


Net carrying value basis
Opening net book value (NBV)
234,107
Direct additions (at cost)
Transfer from CWIP
Reclassification/adjustments
Disposal at NBV
14.1.2
Scrapped at NBV
Depreciation charge
14.1.1
Closing net book value

63,443 155,703
224,022
6,613,267
4,993
26,437
79,642
278,825
559
11,462
867,620
5,299
(455)
(769)
(6,817)
(59,320)
(2,451)
(3,039)
(5,490)
(7,522) (48,183) (52,754)
(775,977)
58,567

146,910

244,093

6,918,925

Gross carrying value basis


as at June 30, 2013

Depreciation rate % per annum

105,408 384,691
491,880 13,900,820
(46,841) (237,781) (247,787) (6,981,895)

2014
Note
14.1.1

2013
Rs. 000s

Depreciation charge for the year has been allocated as follows:


Cost of goods manufactured
Distribution cost
Administrative expenses

135

6,918,925

25.1
26
27

692,899
71,629
91,949
856,477

623,544
65,990
86,443
775,977

Annual Report/2014

14.1.2 Details of operating assets sold

Particulars of assets

Cost

Written
Mode
Sale
down
of
value proceeds disposal

Particulars of buyers

Rs.000s
Land
Plot No. 43 B, Block-6,
P.E.C.H.S.

72,500 Negotiation Mr

. Qamar Usman
Resident No. 431/3, Sirajuddulah Road,
Bahadurabad, Karachi.

6,543

6,543

Ring Spinning

2,535

472

Ring Spinning

1,229

235

Ring Spinning

3,919

756

Ring Spinning

7,991

1,533

5,400 Negotiation Sally Textile Mills Ltd


4-F, Gulberg-Ii, Lahore Distt, Lahore.

Rotary Screen
Printing Unit

5,949

312

2,024 Negotiation Chaudhary Traders


Chak Number 173 G-B,
Tehsil Samundri District, Faisalabad.

Waukesha Generator

5,151

316

3,760 Negotiation Orient Energy Systems (Private) Limited.


Plot 16, Sector 24, Korangi Industrial Area,
Karachi.

Waukesha Gas
Generator

19,776

5,177

8,940 Negotiation Orient Energy Systems (Private) Limited.


Plot 16, Sector 24, Korangi Industrial Area,
Karachi.

Blanket Rubber

755

328

2,113

375

211 Negotiation Zarina Air Conditioning Services


Saddar, Karachi.

601

177

234 Group
Policy

1,311

447

Plant and machinery


2,720 Negotiation Anwar Textile Mills Limited.
8th Floor, Sheikh Sultan Trust - Building,
Beaumor, Karachi.
765 Negotiation International Textile Machinery Enterprise
Suit No.1001, 10th Floor,
Business Plaza, Mumtaz Hassan Road,
Off. I.I. Chundrigar Road, Karachi.
2,308 Negotiation MKB Spinning Mills (Pvt) Limited
446-C, Batala Colony, Faisalabad.

2,131 Negotiation Zulekha W elcome Textiles


F-468 & B-19 Site, Karachi.

Office equipment
Air Condition
Vehicles
Suzuki
Alto - ARG-047
Toyota
Corolla - ASH-278

Annual Report/2014

Mr . Abdul Rasheed - Employee


House # L-42, Sector 5-M,
Khayam Town, North Karachi, Karachi.

1,006 Negotiation Mr. Adnan Ahmed Bhatti


House # E-148, Defence View Phase II,
Karachi.

136

Particulars of assets

Cost

Written
Mode
Sale
down
of
value proceeds disposal

Particulars of buyers

Rs.000s
Suzuki
Alto - APH-643

516

1 11

490 Negotiation Mr. Adnan Hassan Khan


House # A-908/12, F.B. Area,
Gulberg, Ancholi, Karachi.

Suzuki
Cultus - ARM-403

837

224

633 Negotiation Mr . Adnan Hassan Khan


House # A-908/12, F.B. Area,
Gulberg, Ancholi, Karachi.

Suzuki
Cultus - ARC-018

709

205

280 Group
policy

Suzuki
Cultus - AQG-107

640

143

256 Negotiation Mr . Faizan Sidiq


House # B-631, Zaman Town, Korangi 4,
Sector 35/A, Karachi.

Suzuki
Alto - ARJ-057

636

174

255 Group
policy

Suzuki
Alto - AHN-782

507

67

1,498

626

945 Group
policy

900

126

566 Negotiation Mr . Gul Dad


House No. Hk-579, KPT Building,
New Qadri, Karachi.

1,534

759

785 Negotiation Mr. Gul Dad


House No. Hk-579, KPT Building,
New Qadri, Karachi.

Suzuki
Cultus - ASX-284

892

304

736 Negotiation Mr . Gul Dad


House No. Hk-579, KPT Building,
New Qadri, Karachi.

Suzuki
Cultus - ARP-695

836

233

666 Negotiation Mr . Gul Dad


House No. Hk-579, KPT Building,
New Qadri, Karachi.

Suzuki
Cultus - ASW-381

824

281

716 Negotiation Mr . Gul Dad


House No. Hk-579, KPT Building,
New Qadri, Karachi.

Suzuki
Cultus - ARB-417

710

225

61 1 Negotiation Mr. Gul Dad


House No. Hk-579, KPT Building,
New Qadri, Karachi.

Toyota
Corolla - AJF-904

1,002

140

825 Negotiation Mr. Gul Dad


House No. Hk-579, KPT Building,
New Qadri, Karachi.

Toyota
Corolla - AVA-057
Honda
City - AJT-948
Shehzore - CT-3533

137

Mr . Ashraf Nawaz - Employee


House # 8-14/3, F-1, Mohalla Tareen Road,
Quetta.

Miss. Fouzia Anwar - Employee


Flat # 109, Sea Breeze Heights,
Block # 2, Clifton, Karachi.

200 Negotiation Mrs. Ghazala Jaseem


House # A-33, Mohalla Anwar Ibrahim,
Malir City, Karachi.
Mr. Ghulam Rasool - Employee
Flat # B-2/36, Kazimabad, Model Colony,
Block-A, Karachi.

Annual Report/2014

Particulars of assets

Cost

Written
Mode
Sale
down
of
value proceeds disposal

Particulars of buyers

Rs.000s
Toyota
Corolla - ARY-926

1,348

368

Suzuki
Alto - AKW-804

512

77

Suzuki
Alto - APJ-648

516

131

Suzuki
Bolan - CN-5768

396

55

323 Negotiation Mr . Jawed Iqbal


House # 2874, Usman Ghani Colony,
North Karachi, Dakhana Al-Hyderi, Block-R,
Karachi.

Suzuki
Bolan - CS-2237

408

103

403 Negotiation Mr . Jawed Iqbal


House # 2874, Usman Ghani Colony,
North Karachi, Dakhana Al-Hyderi, Block-R,
Karachi.

Suzuki
Cultus - AGR-367

590

65

428 Negotiation Mr . Jawed Iqbal


House # 2874, Usman Ghani Colony,
North Karachi, Dakhana Al-Hyderi, Block-R,
Karachi.

Honda
City - BBA-880

1,876

1,720

1,800 Group
policy

Honda
City - ARE-485

1,070

316

429 Group
policy

Honda
City - ATG-218

1,269

468

850 Negotiation Mr . Mobeen Aslam - Employee


House # A-260, Block J,
North Nazimabad, Karachi.

Suzuki
Swift - AUF-892

1,092

456

750 Negotiation Mr . Mobeen Aslam - Employee


House # A-260, Block J,
North Nazimabad, Karachi.

Honda
City - ASA-718

1,467

433

591

Hyundai
Grace - CN-5666

1,194

129

620 Negotiation

Mr. Muhammad Arif


House No. B-30, 11-C/1, North Karachi, Karachi.

Suzuki
Alto - AHZ-348

504

69

413 Negotiation

Mr. Muhammad Arif


House No. B-30, 11-C/1, North Karachi, Karachi.

Suzuki
Cultus - AFT-094

590

65

433 Negotiation

Mr. Muhammad Arif


House No. B-30, 11-C/1, North Karachi, Karachi.

Annual Report/2014

522 Negotiation Mr . Gul Dad


House No. Hk-579, KPT Building,
New Qadri, Karachi.
419 Negotiation Mr . Imran Ahmed
House # 219, Sector 35-B,
Korangi # 4, Karachi.
212 Group
policy

Mr . Javed Naeem - Employee


House # 426, Street # 7,
Sector 37-D, Landhi #1 Karachi

Mr . Khurram Mushtaq - Employee


House # A-134, Block 7,
Mohalla Gulistan-e-Johar, Karachi.
Mr . Mobeen Aslam - Employee
House # A-260, Block J,
North Nazimabad, Karachi.

Negotiation Mr. Muhammad Arif


House No. B-30, 11-C/1, North Karachi, Karachi.

138

Particulars of assets

Cost

Written
Mode
Sale
down
of
value proceeds disposal

Particulars of buyers

Rs.000s

139

Suzuki
Cultus - APN-169

626

142

573 Negotiation

Mr. Muhammad Arif


House No. B-30, 11-C/1, North Karachi, Karachi.

Suzuki
Cultus - AQY-751

682

155

618 Negotiation

Mr. Muhammad Arif


House No. B-30, 11-C/1, North Karachi, Karachi.

Suzuki
Mehran - AMV-610

402

82

367 Negotiation

Mr. Muhammad Arif


House No. B-30, 11-C/1, North Karachi, Karachi.

Toyota
Corolla - ASP-494

1,428

487

1,189 Negotiation

Mr. Muhammad Arif


House No. B-30, 11-C/1, North Karachi, Karachi.

Toyota
Corolla - ASN-214

1,313

439

1,091 Negotiation

Mr. Muhammad Arif


House No. B-30, 11-C/1, North Karachi, Karachi.

Honda
City - ARE-227

1,070

316

892 Negotiation Mr. Muhammad Faizan Javed


House # 1095, Block-4,
Shah Faisal Colony, Karachi.

Suzuki
Cultus - APL-026

621

146

582 Negotiation Mr. Muhammad Faizan Javed


House # 1095, Block-4,
Shah Faisal Colony, Karachi.

Suzuki
Cultus - ARL-746

775

229

612 Negotiation Mr. Muhammad Faizan Javed


House # 1095, Block-4,
Shah Faisal Colony, Karachi.

Suzuki
Alto - AMJ-446

513

90

205 Group
policy

Suzuki
Pickup - CR-4172

351

61

357 Negotiation Mr. Muhammad Sadiq


House No. G-935,
Adamjee Road, Karachi.

Toyota
Corolla - ATG-946

1,419

504

795 Group
policy

Suzuki
Cultus - ARP-693

831

245

333 Negotiation Mr . Mujeeb-ur-Rehman


Block-A, Area 2-9, S.I.T.E. Karachi

Honda
City - AEM-408

785

64

658 Negotiation Mr . Nadeem-ur-Rehman


House # E-14, KDA Center,
View Apartment, Sector 15-A/1,
Buffer Zone, Karachi.

Suzuki
Bolan - CR-8367

469

89

404 Negotiation Mr . Nadeem-ur-Rehman


House # E-14, KDA Center,
View Apartment, Sector 15-A/1,
Buffer Zone, Karachi.

Mr. Muhammad Javed - Employee


Flat # 101, First Floor,
Mustafa Centre, Karachi.

Mr. Muhammad Yousuf Hussain - Employee


House # C6, Street AB Arcade, Block A,
Fatima Jinnah Colony, Karachi.

Annual Report/2014

Particulars of assets

Cost

Written
Mode
Sale
down
of
value proceeds disposal

Particulars of buyers

Rs.000s
Suzuki
Alto - AQA-149

516

124

208 Group
policy

Mr . Rehan Ahmed - Employee


House # 4/884, Shah Faisal Colony,
Karachi.

Suzuki
Alto - ARK-189

512

60

256 Group
policy

Mr . Riaz Abdul Razzak - Employee


House # 417/2, Area Muzzamil Arcade
Azizabad, Karachi.

Honda
City - ARB-481

1,058

301

424 Negotiation Mrs. Saira Nadeem


Bilal Garden, Plot # 66/3, Flat # B-902,
Karachi.

Honda
City - ARH-033

1,070

339

431 Group
policy

626

148

495 Negotiation Mr . Shaikh Abdul Waheed


House # A-419, Mohalla Harmeen Tower,
Gulistan-e-Johar, Block-19, Karachi.

1,975

561

1,1 13 Negotiation Mr. Sultan Hassan Khan


House No. A-908/12, F.B. Area, Karachi.

Suzuki
Alto - ARJ-247

636

174

493 Negotiation Mr . Sultan Hassan Khan


House No. A-908/12, F.B. Area, Karachi.

Suzuki
Alto - ARM-576

681

197

273 Group
policy

Suzuki
Mehran - APD-028

402

97

Suzuki
Alto - APH-742

516

1 13

491 Negotiation Mr. Syed Muhammad Taufiq


House # B-150, Gulshan-e-Iqbal,
Block-6, Karachi.

Honda
City - APN-894

919

244

351 Group
policy

Mr . Syed Nusrat Abbas - Employee


House # B-405, B Area,
Malir Colony, Karachi.

Suzuki
Mehran - APS-973

406

99

163 Group
policy

Mr . Syed Shujaat Hussain - Employee


House # B-22, Sector 35/A, Zaman Town,
Korangi 4, Karachi.

1,303

445

512

89

Suzuki
Cultus - APM-715
Honda
Civic - ARL-853

Honda
City - ASW-158
Suzuki
Alto - ANT-058

Annual Report/2014

Mr . Saleemuddin - Employee
House # R-124, Tariq Bin Ziyad Society
Jinnah Avenue, Malir Halt, Karachi.

Mr . Syed Adnan Aslam - Employee


House # 309, Mohallah J-1 Area,
Korangi 5, Karachi.

158 Negotiation Mr . Syed Junaid Aziz Bukhari


House # C1-16/1, Second Floor,
Ropali Residency, Block-19, Karachi.

900 Negotiation Mr . Umer Farooq Farooqi


House # A-344, Sector 11-A,
North Karachi, Karachi.
462 Negotiation Mr . Wali Ahmed Khan
House # B-88, Block-C,
North Nazimabad, Karachi.

140

Particulars of assets

Cost

Written
Mode
Sale
down
of
value proceeds disposal

Particulars of buyers

Rs.000s
Suzuki
Alto - AQH-645

516

1 13

489 Negotiation Mr. Wali Ahmed Khan


House # B-88, Block-C,
North Nazimabad, Karachi.

Suzuki
Alto - AQE-843

521

114

485 Negotiation Mr. Wali Ahmed Khan


House # B-88, Block-C,
North Nazimabad, Karachi.

Suzuki
Alto - AND-591

504

90

2,487

2,238

2,414 Insurance
Claim

M/s. EFU General Insurance Ltd.

Suzuki
Mehran - AYL-862

675

497

612 Insurance
Claim

M/s. EFU General Insurance Ltd.

Toyota Previa
TCR-101162961

304

168

2,250
3,529
7,494

26
320
1,539

Honda
Civic - BAQ-548

458 Negotiation Mr . Waseem Khan


Flat # 09, Rufi Corner, Block-13, D/1,
Gulshan-e-Iqbal, Karachi.

54

Negotiation Mr. Muhammad Musherief,


Dar Al Baidah, Riyadh, KSA,
Dubai.

Written down value


below Rs. 50,000
each
- Plant & machinery
- Vehicle
- Others

14.2

1,158 Negotiation Various


2,388 Negotiation Various
801 Negotiation Various

2014

123,443

35,889 141,909

2013

161,636

59,321

76,401

C apital work-in-progress
2014
Machinery and
store items
held for
capitalisation

Cost as at start
Capital expenditure incurred
during the year
Transferred to property,
plant and equipment
Transferred to intangible
assets
Cost as at close

141

Civil
work

2013
Other
assets

T otal

Machinery and
store items
held for
capitalisation
Rs. 000s

175,122

45,556

4,635

225,313

1,408,968

214,845

13,731

1,637,544

(1,242,091) (106,514)

(16,956)

(1,365,561)

341,999

153,887

1,410

199,776
754,842

Civil
work

23,733
98,106

(779,316)

(76,283)

497,296

175,302

Other
assets

2,660
17,331

Total

226,169
870,279

(12,021)

(867,620)

(3,515)

(3,515)

45,556

4,455

225,313

Annual Report/2014

2014
Note
15

2013
Rs.000s

INT ANGIBLE ASSETS


Trade
Marks

Total

23,130
8,488
(11,253)
20,365

4,112
797
(1,254)
3,655

27,242
9,285
(12,507)
24,020

29,465
8,028
3,515
(13,766)
27,242

165,491
(145,126)
20,365

13,763
(10,108)
3,655

179,254
(155,234)
24,020

169,969
(142,727)
27,242

Computer
Software
Net carrying value basis
Opening net book value
Additions (at cost)
Transfer from capital work in process
Amortisation charge
Closing net book value

15.1

Gross carrying value basis


Cost
Accumulated amortisation
Net book value

2014
Note
15.1

Rs. 000s

The cost is being amortized using straight line method over


a period of five years and the amortization charge has been
allocated as follows:
Distribution cost
Administrative expenses

15.2
16

2013

26
27

563
11,944
12,507

1,384
12,382
13,766

16.2

15,680
1,594
17,274

2,075
1,340
3,415

(5,119)
(254)
(5,373)
11,901

(1,163)
(191)
(1,354)
2,061

Remaining useful life of these assets range from one to four years.

LONG TERM LOANS AND ADVANCES


Considered good - Secured
Due from executives (other than CEO and Directors)
Due from non-executive employees

Current portion being receivable within twelve months


following the balance sheet date
Due from executives
Due from non-executive employees
20

16.1

Loans and advances have been given for the purchase of cars, motorcycles and household equipments and
housing assistance in accordance with the terms of employment and are repayable in monthly installments.
These loans are secured against cars, outstanding balance of provident fund, retirement benefits and/or
guarantees of two employees.
Included in these are loans of Rs. 9.730 million (2013: Rs. 0.367 million) to executives and Rs. 0.535 million
(2013: Rs. 0.595 million) to non-executives which carry no interest. The balance amount carries interest/mark-up ranging
from 9% to 14%.

Annual Report/2014

142

2014

2013
Rs. 000s

16.2

Reconciliation of carrying amount of loans to executives


Opening balance
Disbursement during the year
Recovered during the year

2,075
19,067
(5,462)

5,183
(3,108)

Closing balance

15,680

2,075

The maximum aggregate amount due from executives at the end of any month during the year was Rs. 16.554 million (2013:
Rs. 4.852 million).

2014
Note
17

Rs. 000s

ST ORES, SPARE PARTS AND LOOSE TOOLS


Stores
Spare parts
Loose tools

Provision for slow moving/obsolete items

17.1

18

2013

575,990
365,951
3,983
945,924
17.1

432,227
360,497
3,153
795,877

(90,394)

(72,442)

855,530

723,435

Opening balance
Charge for the year

72,442
17,952

57,431
15,011

Closing balance

90,394

72,442

2,926,027
329,995
8,873,680

2,457,304
265,327
6,951,190

12,129,702

9,673,821

Movement in provision for slow moving/obsolete items

STOCK-IN-TRADE
Raw materials
Work-in-process
Finished goods

18.1

18.1

Finished goods include stock of waste valuing Rs. 30 million (2013: Rs. 77 million) determined at net realizable value.

18.2

Raw materials amounting to Rs. Nil (2013: Rs. Nil ) has been pledged with the banks as at balance sheet date

2014
Note
19

Rs. 000s

TRADE DEBTS
Export debtors - secured
Cosidered good

676,438

751,649

806,245
168,385
974,630
1,651,068
(168,385)

1,950,724
137,610
2,088,334
2,839,983
(137,610)

1,482,683

2,702,373

Opening balance
Charge for the year

137,610
30,775

107,785
29,825

Closing balance
.

168,385

137,610

Local debtors - unsecured


- Considered good
- Considered doubtful

Provision for doubtful trade debts

19.1

143

2013

19.1

Movement in provision for doubtful trade debts

Annual Report/2014

2014
Note
20

2013
Rs. 000s

LOANS AND ADVANCES


Considered Good
Current portion being receivable within twelve months
following the balance sheet date
- Executives
- Other employees
Advances to suppliers
Letters of credit

16
20.1 & 20.2

5,119
254
5,373
399,361
404,734

20.1

This includes Rs. 2.57 million (2013: Rs. 2.57 million) paid to Nazir Sindh High Court, Karachi in compliance with the
Order of the Honorable Sindh High Court in respect of ground rent suit as mentioned in note no. 13.4.

20.2

Advances to suppliers include Rs. 4.76 million (2013: Rs. 1.53 million) with related parties - Rs. 3.44 million (2013: Rs.1.53
million) with Arwen Tech (Private) Limited and Rs. 1.32 million (2013: Nil) with Win Star (Private) Limited.

2014
Note
21

2013
Rs. 000s

OTHER RECEIV ABLES


Duty drawback
Duty drawback local taxes and levies
Mark-up rate subsidy receivable
Receivable against sale of property
Others

21.1

13.2
21.1

152,716
7,777
6,918
33,409
145,207
346,027

Note

2013
Rs. 000s

T AX REFUNDS DUE FROM GOVERNMENT


Sales tax
Income tax

23

104,158
6,918
33,409
33,107
177,592

This includes Rs. 105.251 million (2013: Nil) in repsect of GIDC paid as stated in note no. 13.5.

2014

22

1,163
191
1,354
277,841
72,863
352,058

485,588
170,076
655,664

170,299
60,719
231,018

7,024

8,557

105,589
11,600
117,189
124,213

84,638
16,162
100,800
109,357

CASH AND BANK BALANCES


Cash in hand
Balances with banks in current accounts
- Local currency
- Foreign currency
23.1

23.1

Bank balances include Rs. 3.504 million (2013: Rs. 35.341 million) kept with a related party - Habib Metropolitan
Bank (Associated Company).

Annual Report/2014

144

2014
Note
24

2013
Rs. 000s

SALES
Local
Export
Direct export
Indirect export

24.1

Duty drawback

Brokerage and commission

11,422,345

13,182,713

20,810,372
1,359,807
22,170,179
172,963
33,765,487

16,575,435
794,987
17,370,422
143,011
30,696,146

(67,376)
33,698,111

(62,254)
30,633,892

24.1 Sales are exclusive of sales tax amounting to Rs. 417.216 million (2013: Rs. 280.518 million).
2014
Note

2013
Rs. 000s
Re-stated

25

COST OF SALES
Opening stock of finished goods
Cost of goods manufactured
Purchases and processing charges

25.1

Closing stock of finished goods

6,951,190
22,976,999
6,364,232
36,292,421
(8,873,680)
27,418,741

5,012,307
21,764,853
5,852,965
32,630,125
(6,951,190)
25,678,935

11,761,667
3,721,970
3,925,307
2,061,862
111,106
806,507
692,899
113,984
(153,635)
23,041,667

12,897,675
2,976,434
2,865,885
1,739,168
97,779
590,417
623,544
104,584
(98,459)
21,797,027

265,327
(329,995)
(64,668)
22,976,999

233,153
(265,327)
(32,174)
21,764,853

25.1 Cost of goods manufactured


Raw materials consumed
Stores, spare parts and loose tools consumed
Staff cost
Fuel, power and water
Insurance
Repairs and maintenance - net of insurance claim
Depreciation
Other manufacturing expenses
Cost of samples shown under distribution cost

Work-in-process
Opening
Closing

145

25.2
27.1

14.1.1

Annual Report/2014

2014
Note
25.2

2,457,304
12,230,390
(2,926,027)
11,761,667

2,236,375
13,118,604
(2,457,304)
12,897,675

265,271
539,273
21,569
637,386
17,377
153,635
348,774
71,629
563
51,475
77,062
2,184,014

211,224
365,181
13,019
398,081
13,453
98,459
280,425
65,990
1,384
41,326
47,483
1,536,025

561,266
78,655
54,353
135,466
101,463
164,597
39,726
39,604
78,927
48,528
91,949
11,944
4,404
4,619
21,559
30,775
17,952
74,009

409,824
94,717
38,058
112,253
75,634
138,651
31,466
27,531
61,188
44,601
86,443
12,382
3,197
2,139
17,754
29,825
15,011
52,116

1,559,796

1,252,790

DISTRIBUTION COST
Freight and shipment expenses
Staff Cost
27.1
Insurance
Advertisement and publicity
Participation in exhibition
Cost of samples transferred from cost of goods manufactured
Rents, rates and taxes
Depreciation
14.1.1
Amortisation
15.1
Export development surcharge
Other expenses

27

Rs. 000s

Raw materials consumed


Opening stock
Purchases during the year
Closing stock

26

2013

ADMINISTRATIVE EXPENSES
Staff cost
Rents, rates and taxes
Repairs and maintenance
Vehicle up keep and maintenance
Utiliites
Conveyance and traveling
Printing and stationery
I.T. expenses
Postage and telecommunication
Legal and consultancy fees
Depreciation
Amortisation
Auditors' remuneration
Donations
Insurance
Provision for doubtful trade debts
Provision for slow moving/obsolete items
Other expenses

Annual Report/2014

27.1

14.1.1
15.1
27.2
27.3

146

27.1

Staff cost
Cost of sales
2014
2013
Re-stated

- Salaries, wages
& benefits

3,797,511

2,784,996

28,762
41,451
70,213

Distribution cost
2014
2013

Administrative expenses
2014
2013

Total
2014

2013

Rs. 000s
525,208

354,431

541,735

392,820

4,864,454

3,532,247

14,544

28,762

14,544

32,132
46,676

13,066
13,066

10,035
10,035

17,092
17,092

14,768
14,768

71,609
100,371

56,935
71,479

57,583
34,213
3,925,307 2,865,885

999
539,273

715
365,181

2,439
561,266

2,236
409,824

61,021
5,025,846

37,164
3,640,890

Retirement benefits
- Gratuity
- Contribution to
provident fund

- Staff compensated
absences

2014

2013
Rs. 000s

27.2

Auditors' remuneration
Audit fee
Review fee of half yearly accounts
Fee for consolidation of holding and subsidiaries
Review fee of statement of compliance with
code of corporate governance
Other certification fees
Out of pocket expenses

27.3

3,789
100
150

2,750
30
150

50
115
200
4,404

50
32
185
3,197

Donation of Rs. 2.095 million (2013: Rs. 1.920 million) paid to Fellowship Fund for Pakistan. Mr. Mohomed Bashir, Chairman
of the Group was the Trustee of the Fund up to February, 2014.
2014
2013

Note
28

Workers' profit participation fund


Workers' welfare fund
Loss on sale of property, plant and equipment
Property, plant and equipment scrapped

29

80,340
30,530
1,020
4,421
116,311

45,224
18,124
3,519
5,489
72,356

1,635
52,533
54,168

1,151
9,605
10,756

107,040
11,389
62,958
181,387

20,599
7,203
475
28,277

235,555

39,033

OTHER INCOME
Income from financial assets
Interest/mark-up on loans and advances
Exchange gain on realisation of export receivables
Income from non-financial assets
Gain on sale of property, plant and equipment
Scrap sales
GIDC paid in preceding years-Reversed

147

Rs. 000s

OTHER OPERA TING EXPENSES

13.5

Annual Report/2014

2014
Note
30

2013
Rs. 000s

FINANCE COST
Mark-up on long term financing
Mark-up/profit on short term borrowings
Profit on murabaha
Interest on workers' profit participation fund
Bank charges and commission

30.2

302,851
708,040
45,753
3,762
116,939
1,177,345

291,354
856,971
40,340
95,222
1,283,887

30.1

Mark-up on long term financing and short term borrowings include Rs. 69 million (2013: Rs. 58 million) and Rs. 15
million (2013: Rs. 58 million) respectively from related party Habib Metropolitan Bank Limited - Associated Company.

30.2

It includes exchange gain of Rs. 49 million (2013: exchange loss of Rs. 66 million) on short term borrowings in
foreign currency.
2014
2013
Note

Rs. 000s
Re-stated

31

PROVISION FOR T AXATION


Current
- for the year
- prior
Deferred
31.1

234,888
8,637
243,525
12,923
256,448

151,701
(54,041)
97,660
43,483
141,143

1,477,459

848,932

34%

35%

502,337

297,126

(142,701)
8,637
(116,560)
657
4,078
256,448

(92,976)
(54,041)
4,461
(9,554)
(3,873)
141,143

1,221,011

707,789

31.1 Reconciliation between accounting profit


and tax expense
Net Profit for the year before taxation
Tax rate
Tax on accounting profit
Tax effect of
Tax credit
Prior year
Final tax on exports
Admissible/inadmissible
Others

32

EARNINGS PER SHARE - basic and diluted


Profit for the year
Weighted average number of shares

32.1

182,818,218

174,062,102

Earnings per share (Rs.)

32.2

6.68

4.07

Annual Report/2014

148

149

Annual Report/2014

33

There is no dilutive effect on the earnings per share of the Group as the Group has no potential ordinary shares.

32.2

8,739

101,118

109,857

5,134,995

2,032,155

Assets

Liabilities

2014

5,666,176

16,175,646

5,574,899

815,183

2014

2013

Spinning

Segment assets and liabilities

4,612,952

13,572,122

2013

189,315

408,213

2014

80,422

298,233

2013

Gul Ahmed International


Limited (FZC) - UAE

15,493

145,554

161,047

2,509

64,480

61,971

589,848
527,877

7,976

16,823

Rs.000s

Revenue from major customers whose revenue exceeds 10% of gross sales is Rs. 8,939 million (2013: 5,490 million)

33.4 Information about major customers.

38,908

31,394

GTM (Europe)
Limited - UK
2014
2013

(9,134)

106,734

97,600

114,896
17,296

33.3 Unallocated items represent those assets and liabilities which are common to all segments and investment in subsidiary.

33.2

Profit before taxation

Processing

1,312,654

2,339,680

3,652,334

529,670
419,813

1,307

26,411

27,718

27,718
-

2,067

33,843

2014

2,032

8,253

2013

GTM USA Corp.

(4,498)

54,947

50,449

57,292
6,843

2013

4,620

4,620

(2,998,005)
(3,002,625)

9,855,362

2,836,725

2014

10,264,490

1,945,920

2013

Un-allocated

(5,774)

(5,774)

(5,411,106)
(5,405,332)

Elimination of Inter
Segment Transactions
2014
2013

2,535,560

3,743,810

6,279,370

Total
2013

141,143
707,789

72,356
(39,033)
1,283,887
1,317,210
848,932

2,166,142

2,788,815

4,954,957

17,753,051 15,813,987

24,606,245 21,430,821

2014

2013

30,633,892
25,678,935

Total

33,698,111
27,418,741

2014

256,448
1,221,011

1,923,241

3,221,623

5,144,864

701,888
540,841

Rs.000s

2014

GTM USA Corp.

Taxation
Profit after taxation

841,331

616,232

2013

28,310,802 21,780,905
23,165,938 18,128,571

2014

GTM (Europe)
Limited - UK
2014
2013

116,311
(235,555)
1,177,345
1,058,101
1,477,459

257,126

214,952

1,098,457

10,703,756
9,605,299

2013

Processing

Other operating expenses


Other income
Financial cost

Administrative and
selling expenses
Profit/(loss) before tax and
before charging following

831,184

Gross profit

2014

Spinning

9,924,339
9,093,155

Segment Profitability

Sales
Cost of sales

33.1
Gul Ahmed International
Limited (FZC) - UAE
2014
2013

Spinning
: Production of dif ferent qualities of yarn using both natural and artificial fibers.
Processing
: Production of greig fabric, its processing into various types of fabrics for sale as well as manufacture and sale of madeups and home textile products.
Overseas Subidiaries : These subsidiaries are also in the textile business reselling product to the ultimate customers, imported from parent Company.

Transactions among the business segments are recorded at cost.

a)
b)
c)

The Group has the following two reportable business segments:

SEGMENT INFORMATION

Weighted average number of shares in issue during last year have been restated for the effect of bonus shares issued during current year.

32.1

33.5

Information by geographical area


Revenue
2014

Non-current assets
2014
2013

2013
Rs. 000s

Pakistan
Germany
United Kingdom
China
United States
Netherland
France
Brazil
United Arab Emirates
Other Countries

11,354,969
6,053,568
2,171,185
1,669,259
2,626,123
1,934,723
1,602,332
339,723
769,800
5,176,429

13,120,459
3,141,496
2,959,899
2,098,851
2,065,066
1,021,286
1,326,246
503,155
242,358
4,155,076

8,322,853
2,018
72
9,919
-

7,208,615
3,895
3,161
9,182
-

Total

33,698,111

30,633,892

8,334,862

7,224,853

2014
Note
34

Rs. 000s

CASH AND CASH EQUIVALENTS


Cash and bank balances
Short term borrowings

35

2013

23
12

124,213
(7,829,770)
(7,705,557)

109,357
(8,290,416)
(8,181,059)

REMUNERA TION OF CHIEF EXECUTIVES, DIRECTORS AND EXECUTIVES


2014

2013

Chief
Directors Executives
Executives

Managerial remuneration
House rent allowance
Other allowances
Contribution to provident fund

Number of persons

Chief
Directors Executives
Executives
Rs. 000s

Total

Total

5,600
2,240
560
467

9,300
3,720
930
775

397,006
158,780
53,164
23,801

41 1,906
164,740
54,654
25,043

4,800
1,920
730
400

10,400
4,160
1,482
866

298,589
119,435
48,913
18,815

313,789
125,515
51,125
20,081

8,867

14,725

632,751

656,343

7,850

16,908

485,752

510,510

314

320

255

259

35.1

The Chief Executive, Directors and certain Executives are provided with free use of Group cars and are also
covered under Group's Health Insurance Plan along with their dependents.

35.2

The Chief Executive and two Directors are also provided with free residential telephones.

35.3

Aggregate amount charged in the accounts for the year, for meeting fee to five Non-executive Directors and the Chairman
was Rs. 800,000 (2013: five Non-executive Directors Rs. 450,000).

35.4

Executive means an employee other than the Chief Executive and Executive Directors, whose basic salary exceeds five
hundred thousand rupees in a financial year, of the Company and Senior Executive Staff of subsidiaries.

35.5

Chief Executive remuneration includes remuneration to former Chief Executive Mr. Mohomed Bashir upto March, 2014 and
remuneration of newly appointed Chief Executive Mr. Mohammed Zaki Bashir effective from April, 2014.

35.6

Directors remuneration included remuneration of outgoing Director Mr. Abdul Aziz Yousuf upto March, 2014 and thereafter his
remuneration has been included in the category of "Executives" and remuneration of Mr. Ziad Bashir upto March 2014 as
thereafter his remuneration has been discontinued and inclusion of remuneration to director Mr. Zain Bashir effective from
April, 2014.

Annual Report/2014

150

36

TRANSACTIONS AND BALANCES WITH RELATED PARTIES


Related parties comprise subsidiaries, associated companies, companies where directors also hold directorship, directors of
the Group and key management personnel. The Group in the normal course of business carries out transactions with various
related parties.
2014

2013
Rs. 000s

Relationship with
the Group

Nature of Transactions

Associated companies
and others related parties

Purchase of goods
Sale of goods
Rent paid
Fees paid
Commission/Rebate
Bills discounted
Commission/Bank charges paid
Mark-up/interest charged
Holding Companys contribution to provident fund

Relationship with
the Group

Nature of Outstanding Balances

Associated companies
and others related parties

Deposit with bank


Borrowing from bank
Bank guarantee
Trade & other payable
Accrued mark-up
Advances to suppliers
Loans to key management personnel & executives
Payable to employees provident fund

97,188
957
7,200
1,375
3,451
3,341,649
53,503
83,765
71,609

79,208
5,029
7,200
1,250
4,863
1,801,027
38,083
116,260
56,935

3,504
1,213,072
567,241
11,284
18,619
4,763
15,680
9,016

35,341
1,238,406
268,628
11,389
17,942
1,534
2,075
7,712

There are no transactions with directors of the Group and key management personnel other than under the terms of employment.
Loans and remuneration of the key management personnel and executives are disclosed in notes no. 16 and 35, respectively.
Related parties status of outstanding receivables and payables as at June 30, 2014 are also included in respective notes to
the financial statements.

37

CAP ACITY AND PRODUCTION


2014

Unit

Capacity

Production

2013

Working

Capacity

000s

Production

Working

000s

Cloth

Sq. meters
(50 Picks converted)

136,745

80,025

3 shifts

136,745

83,819

3 shifts

Yarn

Kgs.
(20 Counts converted)

51,341

36,096

3 shifts

49,055

37,501

3 shifts

Production is lower due to variation in production mix due to production of high value items and various technical factors.
151

Annual Report/2014

38

FINANCIAL ASSETS AND LIABILITIES


Financial assets and liabilities of the Group as at June 30, 2014 are as follows:

Interest/mark-up/profit bearing
Maturity
upto one
year

Maturity
after one
year

Sub
total

2014
Non interest/mark-up/profit bearing
Maturity
upto one
year

Maturity
after one
year

Sub
total

Total

Rs. 000s
Financial assets
Loans and receivables
Loans and advances
Long term deposits

2,293
-

4,716
-

7,009
-

3,080
-

7,185
81,034

10,265

17,274

81,034

81,034
1,482,683

Trade debts

1,482,683

1,482,683

Other receivables

68,895

68,895

68,895

Cash and bank balances

124,213

124,213

124,213

1,767,090

1,774,099

2,933,945

2,293

4,716

7,009

694,706

2,239,239

2,933,945

1,678,871

88,219

Financial liabilities
At Amortized cost
Long term financing
Short term borrowings
Trade and other payables
Accrued mark-up/profit

7,829,770

7,829,770

442,304

442,304

8,966,780

2,239,239

7,829,770

5,626,162

5,626,162

6,068,466

177,164

177,164

177,164

11,206,019

5,803,326

5,803,326

17,009,345

Off balance sheet items


Guarantees

1,279,730

1,279,730

1,279,730

Bills discounted

2,927,723

2,927,723

2,927,723

Commitments

3,012,647

1,972,929

4,985,576

4,985,576

7,220,100

1,972,929

9,193,029

9,193,029

Annual Report/2014

152

Financial assets and liabilities of the Group as at June 30, 2013 are as follows:

Interest/mark-up/profit bearing
Maturity
upto one
year

Maturity
after one
year

Sub
total

2013
Non interest/mark-up/profit bearing
Maturity
upto one
year

Maturity
after one
year

Sub
total

Total

Rs. 000s
Financial assets
Loans and receivables
Loans and advances
Long term deposits
Trade debts
Other receivables
Cash and bank balances

1,093
1,093

1,360
1,360

2,453
2,453

260
2,702,373
58,157
109,357
2,870,147

561,938
8,290,416
552,793
9,405,147

2,154,999
2,154,999

2,716,937
8,290,416
552,793
11,560,146

3,521,010
191,792
3,712,802

616,117
2,215,854
1,250,869
4,082,840

702
51,312
52,014

962
51,312
2,702,373
58,157
109,357
2,922,161

3,415
51,312
2,702,373
58,157
109,357
2,924,614

3,521,010
191,792
3,712,802

2,716,937
8,290,416
4,073,803
191,792
15,272,948

616,117
2,215,854
2,846,297
5,678,268

616,117
2,215,854
2,846,297
5,678,268

Financial liabilities
At Amortized cost
Long term financing
Short term borrowings
Trade and other payables
Accrued interest

Off balance sheet items


Guarantees
Bills discounted
Commitments

39

1,595,428
1,595,428

FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES


Financial risk management objectives
The Group's activities exposes it to a variety of financial risks; market risk (including foreign exchange risk, interest rate
risk and price risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability
of financial markets and seeks to minimize potential adverse effects on the Group's financial performance.
Risk management is carried out under policies and principles approved by the management. All treasury related
transactions are carried out within the parameters of these policies and principles.
The information about the Group's exposure to each of the above risk, the Group's objectives, policies and procedures
for measuring and managing risk and the Group's management of capital is as follows:

153

Annual Report/2014

39.1 Market risks


Market risk is the risk that the fair value or future cash flows of the financial instrument may fluctuate as a result
of changes in market interest rates or the market price due to change in credit rating of the issuer or the
instrument, change in market sentiments, speculative activities, supply and demand of securities, and liquidity
in the market. Market risk comprises of three types of risks: currency risk, interest rate risk and other price risk.
The Group is exposed to currency risk and interest rate risk only.
a

Currency risk
Foreign currency risk represents the risk that the fair value of future cash flows of a financial instrument will
fluctuate because of changes in foreign exchange rates. Foreign currency risk arises mainly from future economic
transactions or receivables and payables that exist due to transactions in foreign exchange.
Exposure to foreign currency risk
The Group is exposed to foreign currency risk arising from foreign exchange fluctuations due to the following
financial assets and liabilities:
2014
2013
USD 000s
Trade debts
Cash and bank balances
Borrowings from financial institutions
Trade and other payables
Net exposure

6,885
118
(53,223)
(24,851)
(71,071)

7,624
167
(32,578)
(6,538)
(31,325)

The Group manages foreign currency risk through obtaining forward covers and due monitoring of the
exchange rates andnet exposure.
Foreign currency commitments outstanding at year end are as follows:
2014

2013
000s

USD
EURO
JPY
CHF

23,098
539
180,560
27

7,515
1,339
3,310
-

The following significant exchange rates were applied during the year:
Rupee per USD
Average rate
Reporting date rate

Rupees
102.54
98.45/98.25

96.38
98.94/98.74

Foreign currency sensitivity analysis


A 5 percent strengthening/weakening of the PKR against the USD at June 30, 2014 would have increased/decreased
the equity and profit/loss after tax by Rs. 226 million (2013: Rs.100 million). The analysis assumes that all
other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for
June 30, 2013.
The sensitivity analysis prepared is not necessarily indicative of the effects on profit for the year.

Annual Report/2014

154

Interest/mark-up/profit rate risk


Interest rate risk is the risk that the fair value or future cash flows of financial instruments will fluctuate due to
change in the interest/mark-up rates. The Group has long term finance and short term borrowings at fixed
and variable rates.
The Group is mainly exposed to interest/mark-up/profit rate risk on long and short term financing and these
are covered by holding "Prepayment Option" and "Rollover Option", which can be exercised upon any adverse
movement in the underlying interest rates.
Financial assets include balances of Rs. 7 million (2013: Rs. 2.4 million) which are subject to interest rate risk.
Financial liabilities include balances of Rs.11,656 million (2013: Rs. 11,560 million) which are subject to interest
rate risk. Applicable interest rates for financial assets and liabilities are given in respective notes.
Cash flow sensitivity analysis for variable rate instruments
At June 30, 2014, if interest rates on long term financing would have been 1% higher/lower with all other variables
held constant, post tax profit for the year would have been Rs. 3.95 million (2013: Rs. 3.9 million) lower/higher,
mainly as a result of higher/lower interest expense on floating rate borrowings.
At June 30, 2014, if interest rates on short term borrowings would have been 1% higher/lower with all other
variables held constant, post tax profit for the year would have been Rs. 35.1 million (2013: Rs. 64.4 million)
lower/higher, mainly as a result of higher/lower interest expense on floating rate borrowings.
Fair value sensitivity analysis for fixed rate instruments
The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or
loss. Therefore, a change in interest rate at the balance sheet would not effect profit or loss of the Group.

Other price risk


Price risk represents the risk that the fair value or future cash flows of a financial instrument will fluctuate because
of changes in market prices (other than those arising from interest or currency rate risk), whether those changes
are caused by factors specified to the individual financial instrument or its issuer or factors affecting all similar
financial instruments traded in the market. The Group is not exposed to equity price risk.

39.2 Credit risk


Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails
to meet its contractual obligations.
Exposure to credit risk
Group's operating activities exposes it to credit risks arising mainly in respect of loans and advances, trade debts,
deposits, other receivables and cash at bank. The maximum exposure to credit risk at the reporting date is as
follows:

155

Annual Report/2014

2014
Note
Loans and advances
Long term deposit
Trade debts
Other receivables
Bank balances

16
19
23

2013
Rs. 000s

17,274
81,034
1,482,683
68,895
117,189
1,767,075

3,415
51,312
2,702,373
58,157
100,800
2,916,057

The Group manages credit risk as follows:


Loans and advances
These loans are due from employees and are secured against vehicles, outstanding balance of provident fund and
retirement dues of the relevant employee. In addition, the Group obtains guarantees by two employees against each
disbursement on account of loans and these are up to the extent of loans outstanding as at the date of default. The
guarantor will pay the outstanding amount if the counter party will not meet their obligation.
The Group actively pursues for the recovery of these loans and the Group does not expect these employees will fail to
meet their obligations hence no impairment allowance is made.
Trade debts
Trade debts are due from local and foreign customers. The Group manages credit risk inter alia by setting out credit
limits in relation to individual customers and/or by obtaining advance against sales and/or through letter of credits and/or
by providing for doubtful debts.
Export debts are secured under irrevocable letter of credit, document acceptance, cash against documents and other
acceptable banking instruments.
The Group actively pursues for the recovery of the debt and based on past experience and business relationship and
credit worthiness of these customers. The Group does not expect these customers will fail to meet their obligations
except for some doubtful debtors against which adequate allowance for impairment have been made in these consolidated
financial statements.
The Group has established an allowance for the doubtful trade debts that represent its estimate of incurred losses in
respect of trade debts. This allowance is based on the management assessment of a specific loss component that
relates to individually significant exposures. The movement in allowance for impairment in respect of trade debts during
the year can be assessed by reference to note no. 19.
Aging of trade debts is as follows:
2014

2013
Rs. 000s

1 to 6 months
6 months to 1 year
1 year to 3 years

1,440,828
16,492
25,363
1,482,683

2,632,575
49,028
20,770
2,702,373

The Group believes that no impairment allowance is necessary in respect of trade debts are past due other than the
amount provided.
Other receivables
The Group believes that no impairment allowance is necessary in respect of receivables that are past due. The Group
is actively pursuing for the recovery and the Group does not expect that the recovery will be made soon and can be
assessed by reference to note no. 21.

Annual Report/2014

156

Bank balances
The Group limits its exposure to credit risk by maintaining bank accounts only with counter-parties that have stable credit
rating.
The bank balances along with credit ratings are tabulated below:
2014

2013
Rs. 000s

AAA
AA+
AA
A+
A
AAA-

18,105
4,173
20,688
57,725
6,303
49
10,146
117,189

1,033
76,367
2,500
19,639
817
444
100,800

Given these high credit ratings, management does not expect that any counter party will fail to meet their obligations.
Financial assets that are either past due or impaired
The credit quality of financial assets that are either past due or impaired can be assessed by reference to historical
information and external ratings or to historical information about counter party default rates.
The management believes that there are no financial assets that are impaired except against which provision has been
made as a matter of prudence.
39.3 Liquidity risk
Liquidity risk represents the risk where the Group will encounter difficulty in meeting obligations associated
with financial liabilities when they fall due. The exposure to liquidity risk along with their maturities disclosed
in respective notes and in note no. 39.
The Group manages liquidity risk by maintaining sufficient cash and ensuring the fund availability through
adequate credit facilities. At June 30, 2014, the Group has Rs. 14,342 million (2013: Rs. 12,350 million)
available borrowing limit from financial institutions. Unutilized borrowing facilities of Rs. 6,162 million
(2013: Rs. 3,560 million) and also has Rs.117 million (2013: Rs. 94 million) being balances at banks. Based
on the above, management believes the liquidity risk is insignificant.
39.4 Fair value of financial instruments
Fair value is an amount for which an asset could be exchanged or a liability settled, between knowledgeable
willing parties in an arm's length transaction. Consequently, differences may arise between the carrying values
and the fair value estimates.
The carrying values of all the financial assets and liabilities reflected in the financial statements approximate their
fair values except those which are described in respective notes.
39.5 Capital risk management
The primary objectives of the Group when managing capital are to safeguard the Group's ability to continue as a
going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal
capital structure.

157

Annual Report/2014

The Group manages its capital structure and makes adjustment to it, in light of changes in economic conditions.To
maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders or issue new shares.

The Group's strategy is to maintain leveraged gearing. The gearing ratios as at June 30, 2014 and 2013 were as follows:
2014

2013
Rs. 000s

Total borrowings
Cash and bank
Net debt

10,763,715
(124,213)
10,639,502

11,007,353
(109,357)
10,897,996

Total equity
Total equity and debt

6,853,194
17,492,696

5,616,834
16,514,830

61

66

Gearing ratio (%)

The Group finances its operations through equity, borrowings and management of working capital with a view to maintain
an appropriate mix amongst various sources of finance to minimize risk and borrowing cost.
2014
Note
40

2013

Un-audited

Audited

PROVIDENT FUND RELA TED DISCLOSURES


Following is the information based on latest financial
statements of the fund:
Size of the fund - Total assets (Rs. 000s)
Cost of investments made (Rs. 000s)
Percentage of investments made
Fair value of investments (Rs. 000s)

602,870
520,170
86.28%
558,618

40.1
2014

2013

Un-audited
Rs. 000s

500,775
434,582
86.78%
467,698

Audited
%

Rs. 000s

40.1 The break-up of fair value of investment is:


Shares in listed companies
Government securities
Debt securities
Mutual funds
Balance in saving accounts

40.2

41

35,953
189,041
110,401
134,588
88,635
558,618

6.44%
33.84%
19.76%
24.09%
15.87%
100.00%

26,314
202,513
133,971
98,942
5,958
467,698

5.63%
43.30%
28.64%
21.16%
1.27%
100.00%

The investments out of provident fund have been made in accordance with the provisions of Section 227 of the
Companies Ordinance, 1984 and rules formulated for this purpose.

NUMBER OF PERSONS
Number of persons employed as on year end were 12,850 (2013: 12,466) and average number of employees during
the year was 12,715 (2013: 12,397).

Annual Report/2014

158

42

EVENT AFTER BALANCE SHEET DATE


42.1 Subsequent Effects
The Board of Directors of the Parent Company in its meeting held on September 27, 2014 has proposed the
following:
a) Bonus Shares
Your directors have decided to issue 25% bonus shares on the existing paid up capital of the Parent Company
in the ratio of one share for every four shares held.
b) Dividend
Your directors have decided to pay cash dividend @ Rs. 1.50 per share i.e. 15% for the year ended June
30, 2014. Holding Company and an Associated Company have agreed to relinquish their portion of
cash dividend.
c) T ransfer from Unappropriated Profit
An amount of Rs. 650 million to be transferred to general reserve from un-appropriated profit
42.2 Fire in W arehouse:
On July 26, 2014, there was an unfortunate fire incident on the third floor of one of Holding Companys warehouses.
Goods stored on this floor were damaged. Adequate insurance cover to mitigate the loss is in place. Estimate
of the loss is around Rs. 400 million. All the Holding Company's production facilities are working soundly. There
is no disruption in any operation.

43

DA TE OF AUTHORIZATION
These consolidated financial statements were authorized for issue on September 27, 2014 by the Board of Directors
of the Holding Company.

44

CORRESPONDING FIGURES
For better presentation, reclassification made in the consolidated financial statements is as follows:
Reclassification from

45

Reclassification to

Amount
Rs.000s

Sales
Export Sales

Financial charges
Bank Charges

41,131

Trade and Other payables


Others
Others

Trade and Other payables


Taxes withheld
Accrued expenses

16,071
7,903

GENERAL
Figures have been rounded of f to the nearest thousand rupees.

MOHOMED BASHIR
Chairman

159

MOHAMMED ZAKI BASHIR


Chief Executive Officer

Annual Report/2014

Form of Proxy
I/We
of
being a member of Gul Ahmed Textile Mills Limited and holder of
Ordinary Shares hereby appoint
of
or failing him/her
of
another member of the Company,
as my/our proxy in my/our absence to attend and vote for me/us and on my/our behalf at the 62nd ANNUAL
GENERAL MEETING of the Company to be held on October 30, 2014 or at any adjournment thereof.

1) Witness

Signed by me this

day of

2014

Name
Address

Signed

CNIC No.
Affix Revenue
Stamp Rs. 5.00
2) Witness
Name
Address

Folio No./CDC Account No.

CNIC No.

Notes:
1.

A member entitled to vote at the meeting may appoint a proxy. Proxies in order to be effective, must be received
at the Registered Office of the Company duly stamped and signed not later than 48 hours before the meeting.

2.

Proxies granted by shareholders who have deposited their shares into Central Depository Company of Pakistan
Limited must be accompanied with attested copies of the Computerized National Identity Card (CNIC) or the
Passport of the beneficial owners. Representatives of corporate members should bring the usual documents
required for such prupose.

3. A proxy must be a member of the Company.


4. If the member is a corporate entity , its common seal should be affixed to the proxy.
5. In case of CDC Account Holders, attested copies of CNIC or the Passport of the beneficial owners and the
proxy shall be furnished with the proxy form.